Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Oral Answers to Questions — SOCIAL SECURITY

The Secretary of State was asked—

Pensions Green Paper

Mr. David Borrow: What assessment he has made of the responses to the pensions Green Paper received to date. [68005]

Mr. Tim Collins: How many responses to the Green Paper on pensions he has received to date. [68022]

Mr. Edward Leigh: How many responses to the Green Paper on pensions he has received to date. [68024]

The Secretary of State for Social Security (Mr. Alistair Darling): The pensions strategy set out in our Green Paper has received a great deal of support. We have received a number of written responses and expect to receive many more by the closing date, which is 31 March.

Mr. Borrow: Thousands of my constituents who rely on income support will be substantially better off from

1 April, with the Labour Government's minimum income guarantee. However, many thousands more of my constituents rely on a mixture of modest savings and small pensions, and they are little, if at all, better off—and, in some cases, worse off—than pensioners on income support. Can the Secretary of State assure me that, under the proposals in his Green Paper, pensioners will be substantially better off in the future?

Mr. Darling: My hon. Friend is right. From April, the minimum income guarantee will mean that a single pensioner will get at least £75 a week, and couples will get at least £116.60. He correctly identifies a problem that has existed in the social security system for many years, where pensioners may have a modest amount of savings and perhaps a small income. As I announced in December, the Government are studying that difficulty with a view to removing it, because we want to reward saving, and because saving should not be penalised.
My hon. Friend asked a general question. Of course, one of the main objectives of the pensions Green Paper was to ensure that people who work throughout their lives have the opportunity to save, to the extent that they get a pension that is above benefit level. We intend to achieve that objective.

Mr. Collins: Given that one of the Government's first actions, in their first Budget, was to take £5 billion a year from pensioners, will the White Paper give them that money back?

Mr. Darling: The hon. Gentleman will be aware that one of the best things that we can do to help pensioners now and in future is to create a climate of economic stability. Part of our objective in modernising the corporation tax regime was to ensure that companies were more profitable, which would benefit their shareholders, including pension funds and individual pensioners. We now have the lowest corporation tax ever, thanks to this


Labour Government; that is good for pensioners because it is good for the long-term profitability of the corporate sector.

Mr. Leigh: Was it entirely fair to the general public to launch the Green Paper on pensions in December and then, last week, just two or three months later, to launch the lifelong individual savings account—a new form of pension saving—without any mention having been made of LISAs in the original document in December? Was that fair?

Mr. Darling: I can only assume that the hon. Gentleman did not read the Green Paper because, had he read it, he would have seen that it was clearly set out there that we were going to make a further announcement, adding a further option to stakeholder pensions. The important thing is—

Mr. Leigh: indicated dissent.

Mr. Darling: The hon. Gentleman may shake his head, but it was written in the Green Paper. He should read it rather than criticise it.
The hon. Gentleman will also accept that the main thrust of our Green Paper was to give people as many choices as possible, to take account of changing labour market conditions and people's different requirements. As I said in reply to the question by my hon. Friend the Member for South Ribble (Mr. Borrow), our objective is to ensure that as many people as possible save, to enjoy a decent income in retirement.

Mr. Frank Field: Will the Government publish a detailed analysis of all the responses to each of the Green Papers?

Mr. Darling: As my right hon. Friend will know, yes we will. He knows that we have published all the responses to all the consultation exercises that we have carried out, including those to the two Green Papers that he had a hand in drafting. I believe that they are not in the Library because they are too bulky, but they are available, except when people have expressly said that they do not want their response to be made public. The analysis is, of course, taken into account when the Government develop their policy. Therefore, the answer to my right hon. Friend's question is that we are analysing the responses and publishing them in full.

Mr. David Rendel: Does the Secretary of State accept that there is a glaring gap in his proposals as far as the self-employed are concerned? Does he also accept that the self-employed are unlikely to invest sufficiently in second-tier pensions for themselves unless there is at least an element of compulsion?

Mr. Darling: I wonder whether the hon. Gentleman listened to my statement on 15 December and whether he has read the Green Paper, because I explicitly said that the case for compelling the self-employed was stronger than that for compelling everyone else. We know that many self-employed people are not making provision for themselves. Part of the logic of introducing the

stakeholder pension, and of last week's announcement, is to give self-employed people more options than before, so that they have no excuse for not saving.
If the hon. Gentleman reflects on what is said in the Green Paper and what I said in the statement, he will realise that the Government have been looking at everyone's pension needs because our objective is to end the current situation, whereby, as he knows, about one third of people now working would retire on benefit if we did nothing. That is not good enough.

Dr. George Turner: My right hon. Friend will know that, during last week's debate on pensions, a possible misinterpretation could have been put on the facts as to whether there was an element of robbing Peter to pay Paul in the state second pension. Can he confirm unequivocally that all those who will be on the state second pension will be better off—whether they are above or below the £9,000 divide—than they would have been on the state earnings-related pension scheme?

Mr. Darling: My hon. Friend is right because the new state second pension is not earnings related. Therefore, it disproportionately benefits those on low incomes as well as everybody on that part of his or her income below £9,000. The objective is to ensure that those on low pay will accumulate during their lifetime a decent pension on which to retire. Moderate earners will have the increased rebate, which they can take into their funded pension, which we believe will mean that they will be better off than otherwise.

Mr. Quentin Davies: In answer to my hon. Friend the Member for Gainsborough (Mr. Leigh), the Secretary of State was trying, retrospectively, to pretend that his Green Paper, which came out in December, was consistent with the Treasury's proposals for lifelong individual savings accounts, which came out last week. If that were the case, why does page 55 of the Green Paper state:
The legislation for stakeholder pension schemes will provide for schemes to be set up under trust law",
whereas the Treasury's proposals last week explicitly excluded LISAs from being under trust law?

Mr. Darling: Let me explain to the hon. Gentleman. We are legislating to provide for stakeholder pensions to be set up under trust law because without that legislation they could not exist. That is why we are introducing the legislation.
The hon. Gentleman asked also about the proposals that were introduced last week. We are not legislating in that area because primary legislation is not needed to effect the proposals. That can be done by secondary legislation.
I suggest to the hon. Gentleman and to just about everyone else on the Conservative Benches that, if they read the papers before they spoke, they would be much better off.

Benefit Vouchers

Dr. Ian Gibson: What plans he has to review the payment of those benefits under which vouchers are issued to employees. [68006]

The Minister of State, Department of Social Security (Mr. Stephen Timms): In November 1998, we referred draft regulations to the Social Security Advisory Committee to make non-cash vouchers subject to national insurance contributions, in the same way as cash earnings.
After a period of consultation, the committee sent its report to the Secretary of State on 28 January 1999. We are considering the report and its recommendations and will respond in due course.

Dr. Gibson: My hon. Friend will be aware that one of the anomalies raised in the draft regulations became known as the Great Yarmouth anomaly. An unscrupulous employer at a care home was dodging national insurance contributions by paying in Asda vouchers. Does my hon. Friend consider that luncheon vouchers are in the same boat, as it were? After all, first they have never been considered to be part of wages and salaries. Secondly, their use would discriminate against people who do not have national insurance-free and tax-free canteens in their workplaces. Thirdly, it might lead to much unemployment in the catering industry.

Mr. Timms: We announced during the summer of 1997 that we wanted to reduce the burden for business by bringing together the arrangements for income tax and national insurance. The Social Security Contributions (Transfer of Functions, Etc.) Bill which will be considered by the House this afternoon is an example of that process.
Where two people receive the same pay but one receives part of his pay in vouchers, there is no good reason why that person should pay less in national insurance than the other. My hon. Friend has made an important point. It has been possible for unscrupulous employers to avoid paying national insurance by paying part of people's pay in vouchers, thereby keeping the cash wage less than the lower limit for national insurance contributions. That keeps people outside the national insurance system and outside the protection of contributory benefits when they should be inside that system and within that protection.
I believe that what we are proposing is right. I am aware that concern has been expressed about damage to the catering industry. However, I do not see any reason to expect a significant impact on people in that industry.

Mr. Pickles: When considering those persons on benefit and those in receipt of vouchers, will the Government take into consideration the discussion that is now taking place between the Secretary of State and the Home Office about involving the benefit system in the penal system? Will those in receipt of vouchers be treated differently from those in receipt of general benefits? Will the benefits that are designed to support the family be affected? Are there other proposals to bring the penal system into the benefit system?

Mr. Timms: As far as I know, people on probation are not in receipt of luncheon vouchers. I can assure the hon. Gentleman that, in resolving the issue and coming forward with proposals in response to the report that we have received from the Social Security Advisory Committee, we shall take all relevant issues fully into account.

Benefit Fraud

Mr. Syd Rapson: What assessment he has made of the responses to the Green Paper on tackling fraud in the benefit system. [68007]

The Secretary of State for Social Security (Mr. Alistair Darling): The majority of responses supported the direction suggested in the Green Paper. As I announced on 14 January, we shall shortly publish our strategy for combating social security fraud in the light of those responses.

Mr. Rapson: May I congratulate my right hon. Friend on the Green Paper? It is an excellent document, which emphasises that fraud, whether it be a fiddle or an organised gang stealing hundreds of thousands of pounds from the system, robs the poor and the vulnerable. Is my right hon. Friend therefore prepared to set tough targets for his Department, to ensure not only that such crime is detected, but that it is stopped?

Mr. Darling: My hon. Friend is right. Part of the problem that we inherited is that far too much attention was devoted exclusively to the detection of fraud. Clearly, detecting fraud is of the utmost importance, but preventing fraud in the first place is just as important.
With regard to my hon. Friend's kind remarks about the Green Paper, as my right hon. Friend the Member for Birkenhead (Mr. Field) is no doubt thinking, the credit is not due to me, as the Green Paper predates my arrival at the Department. I am sure that my right hon. Friend will have heard my hon. Friend's comments.

Sir Sydney Chapman: On what basis do the Government state in the Green Paper that there is £7 billion-worth a year of fraud in the benefits system? Can he point to any initiative that the Government have taken in the past 21 months to tackle fraud in the social security system?

Mr. Darling: On the latter point, lots. For example, just two weeks ago, we prevented the Royal Mail from redirecting mail in connection with housing benefit, which is one of the major sources of housing benefit fraud. Just before Christmas, I announced a £100 million initiative to get local authorities to check housing benefit claims properly. There is a list of steps that we have taken.
The hon. Gentleman asks on what basis the Government say that fraud could involve, as the Green Paper stated, anything between £2 billion and £7 billion a year. Over the past few months, we have tried to ensure that we can accurately assess the amount of fraud and error in the system. The Green Paper highlighted the fact that, as a result of the system that we inherited, which was in desperate need of proper assessment, it is not always possible to say accurately how much fraud there is in the system.
As I told the House a few moments ago, we shall publish our response to the Green Paper and set out how we intend to proceed. One of the matters that I shall deal with at that point is how we can accurately assess where the weaknesses are in the system, so that we can tackle them.

Mr. Malcolm Wicks: Will my right hon. Friend take this opportunity to comment on the


departmental document on family credit fraud, recently published by the Select Committee on Social Security, which shows that the family credit system is wide open to fraud? Although we understand that it was based on a pilot survey, and that statistically there are some doubts, it suggests major family credit fraud. What steps is my right hon. Friend taking to tackle such fraud, and how are we building into the new working families tax credit defences against fraud, as suggested in the Green Paper on fraud?

Mr. Darling: My hon. Friend is right to say that that preliminary study suggested that there were gaps in the safeguards in the family credit system, which have built up over a number of years. The findings were never published because the sample was so small that they were said not to be statistically accurate. Nevertheless, I decided that, as the Select Committee had asked to see them, they ought to be made available.
I was happy to do that because, at the same time as we received the findings of that initial study, we put in the benefit fraud inspectorate to carry out a further check. As a result of that, a report has been prepared which I considered over the weekend and which I intend to publish later this week. It identifies weaknesses in the system, some of which have been dealt with while others will be dealt with.
My hon. Friend is right—it is important that the working families tax credit works properly and that, if there are any difficulties with it, we deal with them now. My hon. Friend the Paymaster General is seeing the report today. I am sure that she will want to address the safeguards that the Treasury is putting in place during the passage of the Tax Credits Bill through Parliament.

Mrs. Virginia Bottomley: Given that one of the most sensitive areas of benefit fraud concerns the application of the cohabitation rules, and in the light of the overwhelming vote to equalise the age of consent, is the right hon. Gentleman considering equalising the effect of the cohabitation rules?

Mr. Darling: I cannot say that we have any immediate plans to do that. I am aware of the difficulty in the cohabitation rule, and the right hon. Lady will be aware of it, too, because there is nothing new in it. Indeed, as I understood it, the previous Government were not inclined to do anything about the cohabitation rule either. This is a difficult issue, and something that we keep under review, but I cannot promise her that there is about to be an announcement. I do not think that there is.

Child Support Agency

Mr. Bill O'Brien: If he will make a statement on the work of the Child Support Agency independent case examiner; and how many cases are currently pending a decision. [68008]

The Parliamentary Under-Secretary of State for Social Security (Angela Eagle): The Child Support Agency's independent case examiner began work in April 1997. As at 31 December 1998, she had received a total of 2,193 applications. Of those, 416 are still awaiting a decision.

Mr. O'Brien: I thank my hon. Friend for that response, but was not the independent case examiner brought in

because the parliamentary ombudsman could not handle the vast number of cases that were referred to that department? Will she confirm that 40 members of staff in the independent case examiner's office are dealing with cases and that it has taken more than 17 weeks to process one case?
Will my hon. Friend also confirm that, in 1997–98, more than £1.1 million was paid in compensation? In the current year, the figure for compensation could exceed £3 million. Will she therefore take action to speed up the proposed changes to the Child Support Agency, to reduce the number of cases being referred to the independent case examiner and to reduce the amount of money—taxpayers' money—that is paid in compensation?

Angela Eagle: It is absolutely true that the current system of child support maintenance assessment that we inherited from our predecessors requires, in some cases, up to 104 pieces of information to be gathered before an assessment can be made. Clearly, the answer to that lies in the simplification that the Green Paper on reforming the Child Support Agency suggests. I can tell my hon. Friend that 1,500 individuals and 80 organisations responded to the consultation and we hope to make a statement on the way forward soon.

Mr. David Ruffley: Can the Minister explain the basis of the Government's claim that 75 per cent. of absent parents and parents with care will be better off under the new system?

Angela Eagle: First, one of the reasons why almost everyone will be better off is that the new system will work faster and people will get their maintenance. At the moment, 90 per cent. of CSA time is spent assessing maintenance rather than collecting it, so one of the big advantages of the new system will be a much streamlined, and more effective and efficient, way of getting the money to the parent with care.

Minimum Income Guarantee

Ms Rosie Winterton: If he will make a statement on the implementation of the minimum income guarantee for pensioners. [68011]

The Minister of State, Department of Social Security (Mr. Stephen Timms): The minimum income guarantee will be delivered through income support. We plan a number of improvements to help those who are entitled to claim the guarantee to do so, for example by triggering claims at particular events when entitlement is likely to arise. We have also said that we will examine how we might reform the rules to reward better those who save for their retirement.

Ms Winterton: I thank my hon. Friend for that reply, particularly because about 9,000 pensioners in my constituency will benefit from the minimum income guarantee. However, Age Concern and the citizens advice bureau have raised a number of concerns, some of which he has addressed, in respect of the fact that thousands of people are unaware of their entitlement to income support. They will therefore be unaware of their entitlement to the minimum income guarantee.
There is also the issue of the notional interest which is put on savings above £3,000. Is my hon. Friend looking at that matter as well as the other issues that he has outlined?

Mr. Timms: My hon. Friend is quite right. We estimate that between 400,000 and 700,000 pensioners eligible for the minimum income guarantee are not currently claiming income support. Pensioners who are not initially eligible for the guarantee are most likely to become eligible when they reach 75 or 80, or when they start to receive attendance allowance, because, at that point, a higher premium becomes payable and another group of people comes within the scope of the guarantee. We are looking at how to trigger claims from those people automatically at those points, and at other measures that could encourage people to come forward, including a take-up publicity campaign which we hope to run later in the year.
My hon. Friend is also right in that we intend to consider the current rules on savings, which prevent some people who would otherwise benefit from the minimum income guarantee from doing so. We want to produce proposals during this Parliament to address that issue as well.

Mr. Julian Brazier: In answer to an earlier question, the Secretary of State referred to the anomaly whereby people who have saved modest amounts or who have small pensions are penalised by the existing benefits system. In considering the minimum income guarantee, will the Minister confirm that, as it stands, the number of such people will be greatly increased, and that disincentives to save for pensions will become still greater? Will he also confirm that it will take more than tinkering with this proposal to remove the considerably increased disincentive to save for pensions?

Mr. Timms: The question that the hon. Gentleman must answer is: does he agree that even the least well-off pensioners should share in rising national prosperity? Of course, it would be possible to increase the guarantee only in line with prices to keep it at a lower level. That would reduce the number of people benefiting from it, and it would also leave a large number of pensioners stranded on lower incomes than they should be receiving. We are committed to security and a decent income for all in retirement. My right hon. Friend has made it clear—and it is spelled out in the Green Paper—that we are looking into the amount of savings people can have before they become ineligible for the minimum income guarantee, and we shall produce proposals to address that issue.

Mr. David Winnick: Do I take it that the minimum guarantee does not exclude other matters? Is my hon. Friend aware that I am pursuing the case of one of my constituents, who is 79, very unwell—that is not in dispute—has been housebound for three years and has been refused a social fund grant for a mobility chair? Will he give me a promise that, once Question Time is over, he will investigate this matter carefully? The reply that I have received stated that the case has gone through

review and has been rejected. That is totally unsatisfactory. I want justice for my 79-year-old constituent, and I want it very soon indeed.

Mr. Timms: I was not previously aware of the details of my hon. Friend's case, but I should be delighted to look into it if he would write to me about it.

Mr. Steve Webb: The Government want people on £10,000 a year to take out stakeholder pensions, but will not require them to put anything in beyond their rebates. If someone on £10,000 a year puts in just his national insurance rebates at the start of his working life, will he reach retirement needing to depend on the minimum income guarantee?

Mr. Timms: No. The state second pension has been designed to ensure that everyone who is in it will, when he gets to retirement age, have an income above the minimum income guarantee level. People earning more than £9,000 who choose to move into a stakeholder pension should also be above that level. We hope that stakeholder pensions will ensure that people who contribute to them and receive them are above—well above in most cases—the minimum income guarantee level when they retire.

Gillian Merron: How do the measures that the Government are introducing to support pensioners, such as the minimum income guarantee, compare with what would have happened had the link with earnings been restored?

Mr. Timms: The restoration of the link with earnings would have been an extremely expensive measure. We have chosen to concentrate help on those who need it most. The minimum income guarantee allows us, from April, to offer pensioners dependent on income support an increase in their income three times the rate of inflation. That is a significant boost for the pensioners who need it most.

Lone Parents

Mr. Simon Burns: How many lone parents have been sent a letter about the new deal for lone parents since July 1997; and how many of these (a) have received a job and (b) remain in that job under the scheme. [68012]

The Parliamentary Under-Secretary of State for Social Security (Angela Eagle): Up to 25 December 1998, 88,662 initial letters had been sent to lone parents. Information on the number of lone parents who have been sent letters and who have subsequently found a job and on the proportion remaining in work will not be available until the full evaluation of the prototype phase, which is due to be published in the autumn.
What we do know is that the new deal is helping lone parents into work. By 25 December 1998, 27,231 lone parents had decided to join the programme, of whom 5,881 had found jobs.

Mr. Burns: Does the Minister accept that I find her answer rather lame and surprising, given that the


Government—certainly until last summer—have always answered this question in written form, month on month? Did the Minister sidestep this issue because the figures show that almost 66 per cent. of people who receive a letter throw it away, and only about 7 per cent. of people find jobs, at a cost of £15,000 per job? The number of people who stay in a job long term is less than the 5,881 figure that the Minister gave, which shows a success rate of slightly less than 5 per cent.

Angela Eagle: I have answered the hon. Gentleman's question. We do not know how many people who now have jobs took advantage of the new deal because they received the letter, and how many did so because—[Interruption.] That is the way in which the hon. Gentleman phrased his question. He will find that I have answered the question accurately, as you require us to do, Madam Speaker. Until the end of the pilot scheme, we shall not be able to distinguish between those who took advantage of the new deal following receipt of the letter, and those who went along to the office because, for instance, they had seen advertisements. The hon. Gentleman will have a final answer then; meanwhile, I can confirm that we shall continue to publish results for him monthly.
I do not share the hon. Gentleman's rather pessimistic view of the results so far. Indeed, given that he was a member of a Government who did nothing but abuse lone parents for 18 years, I find his attitude incomprehensible.

Mr. Gerry Sutcliffe: The success of the new deal for lone parents is shown not just by the number of lone parents who have returned to work, but by the cultural change that has taken place in the attitude to people on benefits. Personal advisers have advised lone parents on whether to stay on benefit or take up work, depending on which pays. Does that not constitute a dramatic change from the attitude of the Conservatives, who, when they were in power, described lone parents as scroungers?

Angela Eagle: I could not agree more. We should remember that some lone parents have been out of the work force for a long time. If we can get such people into training, or make it possible for them to contemplate looking for a job when their children reach a certain age, that will be a positive outcome of the new deal. It is not simply aimed at people who can go into jobs immediately.

Mr. Iain Duncan Smith: Did not the Minister's reply to my hon. Friend the Member for West Chelmsford (Mr. Burns) show that the whole scheme has now failed? She has told us that, in fact, the Government have a strike rate of marginally above 5 per cent. in terms of people returning to work, and that the cost is £15,000 a job. Is it not the case that over the past two years, instead of looking properly at the programme and realising the direction in which it was heading, the Government have failed to take account of the problems?
Most important, will the Minister now undertake to reply to the last part of my hon. Friend's question: what is the fall-out rate after six months? The results have been published month on month, and the rate has risen to as high as 23 per cent. Now the Department has written to

us saying that it will not answer the question, because the cost would be disproportionate. What has the Department got to hide?

Angela Eagle: I find it surprising that the hon. Gentleman can dismiss the fact that nearly 6,000 lone parents now have jobs and are able to support children in poverty. Part of the Conservative Government's legacy was the fact that almost one child in three was born into poverty. We are determined to do something about that, and this is a way of doing it.

Single Gateway

Mr. Ben Chapman: If he will make a statement on his Department's role in the single work-focused gateway. [68013]

The Parliamentary Under-Secretary of State for Social Security (Angela Eagle): This Department and the Department for Education and Employment have joint responsibility for the delivery of the single work-focused gateway. Both Departments are working together to develop a more integrated and work-focused service for benefit claimants.

Mr. Chapman: Does my hon. Friend agree that the Government's view that work is the best form of welfare is generally shared? Does she also agree that many people in my constituency, including disabled people, have hitherto felt discouraged from working, and will see a fresh opportunity in the new single gateway? Is it not important for personal advisers to be trained adequately for their important task, and should we not proceed in the pilot areas, focusing attention on where help is needed, as quickly as possible?

Angela Eagle: We must deal sensitively with people with disabilities who may be entering the labour market for the first time. Research shows, however, that nearly 1 million people with disabilities want a chance to participate in that market. [Interruption.] Rather than sneering, the Conservative party should give us some credit for trying to include those people in society.

Miss Anne McIntosh: Does the hon. Lady agree that personal advisers will have a crucial role? I understand that parts of the Vale of York and City of York will fall within the pilot scheme. What will the precise role of the personal adviser be? How many of them will there be? What will the cost to the taxpayer be? The Minister touched on the role of disability benefits. Can she assure me that no disabled person will have benefit removed because he or she is not able to access the interview on the first date given?

Angela Eagle: The idea is to pass on to the benefits system some of the important lessons that we have learnt in implementing the new deal, where the role of the personal adviser has been much appreciated by people who have been through that training. The idea is for the personal adviser both to ensure that the correct benefits are claimed and to investigate pathways to independence for the person who is having the interview. The pilots will take place initially in 12 areas. The cost set aside for running the 12 gateway pilots is £80 million.

Departmental Budget

Mr. Andrew Lansley: What increase in his Department's budget he expects between financial years 1997–98 and 2001–02 attributable to decisions made since 1 May 1997. [68014]

The Secretary of State for Social Security (Mr. Alistair Darling): Social security spending is growing at less than half the rate under the previous Parliament. Our plans are prudent and address the real needs of families and the poorest pensioners.

Mr. Lansley: Does the Secretary of State understand that I am disappointed that, in his answer, he did not recognise that social security spending will rise by £37 billion in the next three years? Will he confirm that about one third of that increase is directly attributable to Government decisions since May 1997? Will he further recognise that that runs directly counter to the Government's manifesto promise that they would
break the spiral of escalating spending on social security"?

Mr. Darling: I am delighted to help the hon. Gentleman. I can confirm that, of the increase in spending, some £12 billion will go towards supporting pensioners, some £7 billion will go towards supporting disabled people and carers and a further £7 billion will go to families and children, with a record increase in child support. If he is telling us that the Conservatives are against all those things, I am sure that pensioners, disabled people, their carers and families with young children will begin to wonder what on earth the Conservative party is all about.
Social security spending is now growing at half the rate that it was under the last Parliament over which the Conservatives presided. We are getting the social security system under control. We are tightening the gateways to benefit; we are tightening our offensive against fraud. We are cutting the bills of economic failure, which we promised to do in our manifesto, and getting more people into work. What we have is a modern, effective and manageable social security system. At the same time, we are helping the most vulnerable people in society, whom the Conservatives neglected for years.

Fiona Mactaggart: Would the Secretary of State like to explain the difference between the proportion of the social security budget that is being spent on failure and joblessness, and the proportion that was spent under the previous Government? How have our policies shifted that proportion?

Mr. Darling: My hon. Friend makes an important point. If people follow the exchange of questions, it will be increasingly obvious that the Conservative party has little interest in doing anything to help people to get off benefit and into work. We have announced a range of proposals. The single gateway into the benefit system will mean that, for the first time, everyone of working age will come through a gateway and be advised on how to get back into work, as well as to their entitlement if they are not able to work. We attach considerable importance to doing that because that is the way in which to cut the bills

of economic failure. By doing that, we can do far more for those who need security and who look to the Government to help them.

Mr. Archy Kirkwood: Has the Secretary of State had a chance yet to study the recent work by the London school of economics, which examines the hitherto unknown proportion of people who are above the age of 55, are out of work and can be helped back into work by sensible targeting of the new welfare-to-work proposals? If there are some extra pockets of money that he can find, will he give priority to trying to help that group of the population into work? The LSE's work shows that much can be done to try to help that cohort of the population.

Mr. Darling: The hon. Gentleman makes an important point. Many people over 50 are capable of work, but sometimes find themselves out of work, and they are beginning to wonder whether life has passed them by. The Government attach considerable importance to ensuring that everyone who can work does so. We shall look at what further action we can take to encourage not only that group of people, but others to get into work.

Mr. Iain Duncan Smith: Will the right hon. Gentleman admit that the point, quite simply, is that the Government were elected on a pledge—in which the Prime Minister was to the forefront—to cut social security spending? The Prime Minister made the pledge not once, but two or even three times. Now, we notice that Ministers never want to repeat the pledge, as they are clearly failing to keep it. Surely the admission that, next year, as a direct result of the Government's activities, social security expenditure is likely to rise by about 4 per cent. explains why Ministers are scrabbling round, trying to tax child benefit and penalise married couples—who have declared an obvious relationship and who will suffer directly as a result of the Government's policies. Will the right hon. Gentleman now admit that, by increasing spending, the Government have changed the policies that they promised, during the general election, to pursue? Ministers have admitted the increase, and they have failed in their pledge.

Mr. Darling: The hon. Gentleman knows that he is quite wrong about that. He was at it again this morning, on the "Today" programme. Half what the Department of Social Security spends goes on pensioners; about 10 per cent. goes on families and children; and about a quarter goes to sick and disabled people. At the general election, we said that we would cut the bills of economic failure, and we are doing that. At the general election, we promised that we would do more for pensioners, and we are doing that. We also said that we would do more to support families and children, and we are doing that with a record child benefit increase. We also said at the general election that we would do more to help sick and disabled people, and their carers. Later today, my hon. Friend the Minister of State, Home Office will be making a statement on that matter, to deliver yet another manifesto promise.
The point—I appreciate that Conservative Members find it difficult to understand—is that this Labour Government have kept each and every one of our promises. We have a social security system that is


manageable, affordable and equipped to meet the needs of the United Kingdom, both now and in the future. Conservative Members will just have to face up to that fact. If they disagree with what we are doing, let them tell us whether they want to cut pensions, support for families or support for the disabled. If they cannot answer that question, they really should keep quiet.

Habitual Residence Test

Ms Oona King: If he will make a statement on the habitual residence test. [68015]

The Parliamentary Under-Secretary of State for Social Security (Angela Eagle): Our review of the habitual residence test is on-going. We shall make our recommendations for its future once we have received and considered the judgment of the European Court of Justice in the case of Mr. Robin Swaddling, which is due to be given on 25 February.

Ms King: I thank my hon. Friend for that reply. Is she concerned by claims that, although the Government save about £30 million annually by refusing claimants under the habitual residence test, an almost equivalent amount is paid out to families facing destitution under the Children Acts and the National Assistance Act 1948? Moreover, many people on benefit are discouraged from seeking employment in the European Union because of the risk of losing benefit when they return. Will the review take those two points into consideration?

Angela Eagle: We should remember that 89 per cent. of United Kingdom nationals who take the test pass it, and that 85 per cent. of all those who take it pass it. My hon. Friend will remember as well as I do the test's origin—a certain singalong performance at Tory party conference a few years ago. We shall consider the points that she has raised—especially in the light of the European Court of Justice statement, on 25 February—and continue to investigate how best we can balance the right of United Kingdom taxpayers not to subsidise people with very little connection to the United Kingdom with the understandable rights of United Kingdom citizens.

Mr. Nicholas Soames: Does the hon. Lady consider that issuing identity cards would make that type of work much easier?

Angela Eagle: The identity card issue is really one for my right hon. Friend the Home Secretary. However, on the habitual residence test, the benefit of changing policy to quite the extent suggested by the hon. Gentleman would be like using a sledgehammer to crack a nut.

Consultation Papers

Dr. Lynne Jones: If he will publish summaries of responses to his Department's consultation papers. [68016]

The Parliamentary Under-Secretary of State for Social Security (Mr. Hugh Bayley): Lists of those organisations and academics who responded to our consultation papers, excluding those who requested

confidentiality, have been placed in the House Libraries. Copies of their responses are available on request from the Department.

Dr. Jones: Will my hon. Friend confirm that submissions to Government consultations are all read, that his Department collates them and that an assessment is prepared for Ministers' consideration? If that information is readily available—as one would expect, otherwise Government consultations would be shown to be a sham—and the Government are committed to openness and transparency, what is the problem with publishing it? Will he publish his Department's assessment of responses to Green Papers, including the important welfare reform Green Paper?

Mr. Bayley: All the responses are read and considered by the Government; they inform Ministers' decisions. Summaries of the sort that my hon. Friend suggests are not prepared for Ministers. Any summary that the Government published could not give a totally balanced view. It would inevitably be open to the criticism that some important comments had been excluded or that a Government gloss had been put on others. We believe that all the comments should be available. I believe that my hon. Friend has requested copies of 49 of the submissions that have been made. We can make them available to others who request them.

Mrs. Theresa May: Is the Minister aware of the responses made to his paper proposing changes to disability benefits by representatives of the Disability Benefits Consortium at a meeting in the House before Christmas? The Government's proposals to means-test incapacity benefit were described as a betrayal and one disabled person said that he was incensed that, although the Government were encouraging him to save for a pension—which is often difficult, given that a disabled person may not have the same working pattern as others—he would now find them putting their hands into his pocket and taking some of that money away. Will not the Government's proposals result in some disabled people having their incapacity benefit cut and many failing to qualify for it? If he does not receive summaries of all the responses to his Green Paper, can the Minister be sure that he has taken all the comments into account? If he does not, what kind of consultation is it?

Mr. Bayley: I have read the consortium's views. I should be a foolish Minister not to do so when forming an opinion on the views that have been submitted. It would not be sufficient simply to look at a summary. One needs to consider the whole document.
The changes to incapacity benefit are an attempt to modernise the system and target resources where they are most needed. The majority of people save for their retirement through a pension. Some 86 per cent. of men in full-time jobs and 77 per cent. of women in full-time jobs do so, as do a far higher proportion of women in part-time jobs than was the case when out-of-work sickness benefits were introduced. It is not sensible to ignore the provision that people have made for themselves. Those who make their own provision will be considerably better off. The hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) always talks about means testing. He is as wrong now as he has been in the two recent debates.

Savings (Retirement)

Mr. Ian Pearson: What proposals he has to encourage saving for retirement. [68017]

The Minister of State, Department of Social Security (Mr. Stephen Timms): The reforms described in the pensions Green Paper published on 15 December should raise the incentives to voluntary saving through better-quality, better-value second pensions and restructured state support.

Mr. Pearson: I congratulate the Government on the pensions Green Paper. It is about time that someone grasped the nettle of modernising this country's pensions industry. I am confident that the proposed new framework will be a major improvement. When working out the detail, will my hon. Friend ensure that those who change their jobs frequently or take career breaks are not penalised and are given effective options? Will he also ensure that the Government lead the way and build in a right to an employer contribution to a pension plan for any employment funded indirectly through grants, such as the single regeneration budget programme?

Mr. Timms: My hon. Friend is right. There has long been a need for the changes that we have proposed. For far too many people, a good-value funded pension—or one that they can access on reasonable terms—is not available, and they are exactly the people at whom the stakeholder pension is aimed. We are committed to ensuring that everybody who can afford to save for retirement should have every encouragement to do so, and the proposed framework will have that effect. I will be happy to have a look at the question of the single regeneration budget, to which my hon. Friend referred.

Mr. Peter Viggers: Is it not becoming increasingly clear that the combination of the guaranteed minimum pension and the increase in means testing will mean that many people who have saved for their retirement will be worse off than people who have made no provision for themselves at all? The Secretary of State may shake his head and Ministers may duck and weave, but that is a fact, and the Government are creating a monstrously unfair system. Is the Minister aware that, when people look behind the bland words of Ministers and see the facts, they will be deeply resentful?

Mr. Timms: The hon. Gentleman is mistaken. The aim of the framework proposals is that those who are able to save should do so, but that there should be security for those who are not able to save. The state second pension is a 100 per cent. contributory scheme which will ensure that everyone who has worked and contributed throughout his or her life will retire on an income above the minimum income guarantee level, which will mean that he or she has the full benefit of all their savings. There is no disincentive to save; we are increasing the incentive to save. I hope that Conservative Members agree that even the least well-off pensioners should share in rising national prosperity.

Mr. Lawrie Quinn: Will my hon. Friend reassure those on low and modest incomes

that the Government's proposals for modernising pensions will target them, and afford them the same support that the vast majority of people in this country get at the moment?

Mr. Timms: My hon. Friend is right. The state second pension will provide modernised support for people on low incomes, and will double the accrual rate on the state pension for people on £9,000 a year. It will treat people on incomes below that level as if they had been earning £9,000 a year throughout their working lives. That will be done on the basis of the existing 4.6 per cent. state earnings-related pension scheme contribution, without any addition. That is a very important step forward for people on low earnings—those about whom my hon. Friend is rightly concerned.

Welfare Reforms

Mr. Desmond Swayne: What plans he has to ensure that his welfare reforms encourage self-reliance. [68018]

The Secretary of State for Social Security (Mr. Alistair Darling): We are building a modern welfare state, based on rights and responsibilities. We are actively providing opportunities and incentives to help people into work and to provide for themselves, and we are ensuring that work pays while providing security for those who cannot work.

Mr. Swayne: Although we can continue to debate the consequences of means testing, does the Secretary of State accept that the minimum pension guarantee will lead inevitably to an increase in means testing?

Mr. Darling: The logic of what Conservative Members are saying is that we should withdraw support altogether from people who have not managed to save any money. We do not believe that the prospect of leaving pensioners, or anyone else, destitute is acceptable. One of the problems that we have inherited is that a third of people who are now working are retiring on benefit. Over the years, the poorest pensioners have suffered a great deal, and we have introduced the minimum pension guarantee to help those who have nothing. We are providing also a guarantee for the poorest disabled people. Most people who look at what we are doing will realise that we are doing the right thing by those people.
We are proposing a framework that will mean that the majority of people who are working will accrue enough of a pension during their working life to retire on a decent income. In the pensions Green Paper, we have a coherent and workable strategy, which will mean that all those who can work throughout their lives and can save will retire on a decent pension. At the same time, we will not turn our backs on those who are unable to save, as the Opposition appear to be urging us to do.

Mr. Dale Campbell-Savours: Do not high rents and high housing benefit payments totally undermine self-reliance? Is not the real answer to the problem to find a way of dramatically cutting rents in this country?

Mr. Darling: My hon. Friend is right to say that the housing benefit regime is in need of reform, and he is no


doubt aware that the Government are considering how to improve the situation, but he must recognise that the system that we inherited has grown up over about 25 years, and that it will be some time before we can announce our conclusions on how to implement that reform.

Mr. John Bercow: Further to the very pertinent inquiries from my hon. Friends the Members for Gosport (Mr. Viggers) and for New Forest, West (Mr. Swayne), why will not the Secretary of State, instead of blathering, simply admit the obvious truth—that the Government's pension proposals will massively increase means testing at the lower end of the scale, discouraging savings at the margins? He must surely admit that, in that sense, the policy that he advocates will be a penalty for self-reliance and not a reward.

Mr. Darling: I do not accept that at all. The whole strategy behind the Green Paper is to ensure that as many people as possible have the choice to save for their retirement. The hon. Gentleman will have to face up to the fact that without a change of policy, a third of people currently working would retire on benefit. The Government have decided that the policy needs to change, to ensure that, if people work for a lifetime, they can save and retire on a pension that is above means-tested income support. We believe that that is of considerable importance, but we will not turn our backs on those poorest pensioners who, for one reason or another, have not been able to save for their retirement. We have a comprehensive strategy for pensions, which the previous Government did absolutely nothing about for 18 years.

Benefit Integrity Project

Maria Eagle: What recent representations he has received on the benefit integrity project. [68019]

The Parliamentary Under-Secretary of State for Social Security (Mr. Hugh Bayley): We have received representations on various aspects of the benefit integrity project, from a variety of sources, including through discussions with the disability benefits forum. We have listened to those representations. On 28 January, my right hon. Friend the Secretary of State announced that the project would be cancelled from 31 March 1999 and replaced with a new, fairer system of periodic review.

Maria Eagle: I am grateful for my hon. Friend's reply, and many of my constituents who have come across the benefit integrity project will be grateful for its abolition, but they will also be concerned about what is to replace it. Can he assure the House that the new review system will deal much more with the individual needs of claimants instead of simply trying to force everybody on to the same form, creating all kinds of problems?

Mr. Bayley: Yes, we can give that assurance. The new system will be fairer because, unlike the system that we

inherited from the Conservatives, it will allow benefits to be increased as well as decreased. It most certainly will consider the claimant's individual needs; the agency will have a much more personalised approach. The review process that we inherited for the benefit integrity project was designed by the Conservatives; we are developing the new process in consultation with the disability lobby, through members of that lobby on the disability benefits forum.

Mrs. Jacqui Lait: I understand that Ministers have said that some people are receiving disability living allowance who apparently have no medical reason for doing so. What is the Minister's estimate of the number involved, and how great is the problem?

Mr. Bayley: In perhaps about a third of the cases reviewed, the evidence was not there. I cannot be more precise than that because, as the hon. Lady will know, some cases are still under review through the adjudication system and the appeals system.

Personal Advisers

Mr. Tony McNulty: If he will make a statement on the role of personal advisers in his plans for welfare reform. [68026]

The Parliamentary Under-Secretary of State for Social Security (Mr. Hugh Bayley): Personal advisers currently operate successfully in the various new deals and have demonstrated that they can make an important and successful contribution, in assisting people to move towards the world of work and increase their independence. Under our proposals for a single work-focused gateway into the benefit system, all working-age claimants will be provided with a personal adviser, who will work with them to assess their job potential and provide access to a variety of help and information on work, benefits and services.

Mr. McNulty: I am grateful to my hon. Friend for that answer. Given the success of personal advisers in the new deal, will he assure me that personal advisers for the single gateway get the resources that they need for such a demanding job? While I am on my feet, will he ignore totally the carping and whingeing of Conservative Members, who giggled like schoolchildren when personal advisers and the success that they have achieved were mentioned earlier?

Mr. Bayley: It is important that personal advisers should be well trained for the demanding task that they face—and they will be well trained. They are making an important impact. The pilot schemes are at a fairly early stage and the lessons that we learn from them will help us to improve the training further.

Carers

The Minister of State, Home Office (Mr. Paul Boateng): With permission, Madam Speaker, I should like to make a statement about the publication today of the Government's national strategy for carers. You will be aware that some details of our proposals are now in the public domain. It was our intention to publish an answer to a question this morning but, due to an administrative error, that did not prove possible. No discourtesy was intended to the House, and I have written to my hon. Friend the Member for Colne Valley (Kali Mountford).
The Prime Minister, on 10 June 1998, announced plans for a national strategy for carers, which he asked me to lead. The Government believe, as the Prime Minister himself said last June, that carers play a vital role in the community and also in supporting families. The national health service and social services could never hope to provide what carers contribute to the care of the sick and the vulnerable. The Government are determined to see that carers get the support that they need.
The Prime Minister said that the national strategy should bring together existing initiatives into a single package for the first time. We have done more than that. As I shall explain, we are announcing today a substantial new policy package for carers.
The work on the national strategy for carers has involved a large number of organisations—not only Government Departments and people from the NHS and local authorities, but individual carers, representatives of carers' organisations, and representatives of more specialised voluntary organisations which, for example, help people with mental health problems. We are grateful to all those who joined working groups and to those who attended a major consultative conference on the strategy held last November. I was glad to welcome to that conference hon. Members from both sides of the House, as well as Members of the House of Lords.
The policies of a large number of Government Departments impact on carers. The document published today involves all of them. We held, for the first time, two meetings of a ministerial group specifically established to consider carers' issues.
People who provide care for relatives or friends who are disabled, vulnerable or frail can devote large parts of their own lives to looking after others. Many of them are also in paid work. The majority of carers are women. All of them need some help and support. Our national strategy for carers describes what we have been doing, and what we are going to do. Carers will have better information; they will be better supported; they will be cared for better themselves.
Two thirds of carers of working age are in paid employment. For many of them, combining work with caring can be difficult. The Government's family-friendly employment strategy will help them. We will give carers the right to time off to deal with a family emergency. For example, a carer might need time to take his or her elderly parent to hospital, following a fall. The Second Reading of the necessary legislation, the Employment Relations Bill, is scheduled for tomorrow.
We have also considered carers who cannot combine paid work with caring. Many carers of working age would like to do so. Even more would like to be able to return

to work when their caring responsibilities come to an end. We will consider the scope for extending the new deal to help carers to return to work. We will publicise the benefits—to employers, as well as to carers—of flexible, carer-friendly employment policies. We will consider our own position as a major employer and make sure that we set the highest standards for carers working in the public sector.
Carers also need support from the statutory services. That does not mean social services alone—all services need to provide carers with information and to involve them in the planning of services. Only in that way can services be more responsive to carers' needs.
The national health service has an important role in that respect. It must help carers to maintain their own health: half of all carers in a recent study said they had suffered from a physical injury since they began to care; and half said that they had been treated for stress-related illnesses. The Government's national priorities guidance to health and local authorities will require those authorities to help carers to maintain their health and emotional well-being.
The national health service must also provide information to help carers to care. They need to know about the health needs, treatment and medication of the person for whom they care. Of course, that can be done only with the consent of the patient, but sometimes doctors do not ask or explore that option. It is vital that patients' agreement be sought, and we believe that doctors should always do so.
We have already announced an extra £750 million for local authorities over the next three years to help them to promote independence, especially through greater partnership with the health service on prevention and rehabilitation. People who need care and their carers will benefit from that.
We are going further, by providing from within the comprehensive spending review plans £140 million of additional funding for England over the next three years specifically to help carers. It will be a ring-fenced special grant that will go to local authorities to extend the range of services that they provide to give carers a break from their caring responsibilities. The research evidence shows that carers who have a break are better able to cope and that their own health suffers less. The new special grant will total £20 million in 1999–2000, £50 million in 2000–2001, and £70 million in 2001–2002.
We also intend, when parliamentary time allows, to introduce new legislation to extend the powers that local authorities have to address carers' needs directly. At the moment, the focus of most of the legislation is on the person needing care. We want carers to have more control over the form and timing of the services that they need as carers. That is especially true of services designed to give them a break from caring.
The national strategy will also help some specific groups of carers. First, we are announcing today that there will be a reduction in council tax for some disabled people. Those who live in accommodation that is valued at band A and that has an extra room which they need because of their disability, or enough floor space to allow them to move around in a wheelchair, will receive a reduction in council tax similar to what is given now for the other bands. That change will be made from 1 April 2000. It is long overdue and it is only fair.
Secondly, we have particular concerns about young carers. The Government are taking extensive action to offer new help to children and young people and we are placing particular emphasis on supporting the most disadvantaged children and their families. Children who have to provide personal care to a parent may not even realise they are carers, but their attendance at school can suffer; they can also have difficulty doing their homework; and they often have no time for leisure, for play, or to meet their friends.
The Government will promote awareness of the needs of young carers. We shall encourage schools to make sure that there is someone to support them. That need not be a teacher—it could be someone else with the right skills and the time to develop special expertise. Children who are carers might need help to contact professionals in the health service, the social services, or a local project worker specifically for young carers. They need help and they need someone who is there for them.
There is also a group of children who need more care than other children of the same age. Their parents are especially in need of help and support: for example, they might feel unable to spend enough time with the rest of their family. We are increasing the help and support we provide to parents of a disabled child. We have already announced new objectives for children's services, which require local and health authorities to work together to meet the needs of disabled children.
Social services will get an extra £375 million to help them to meet the needs of vulnerable children. We are also introducing new children's nursing teams, in memory of Diana, Princess of Wales, to support those children who have life-threatening health problems. Those will cost £2 million a year initially, and we are establishing 10 teams around the country.
Many carers need help and support in the neighbourhoods where they live. In general, we believe that this is best provided by voluntary organisations. They are doing some wonderful work which, in the course of preparing the strategy, I was privileged to travel around the country and see at first hand. Many hon. Members on both sides of the House will be aware of that work in their constituencies. Carers' centres are but one example. They already exist in a number of areas and we want to make sure that all carers have access to a support service near where they live. The national strategy report also describes how we intend to make sure that carers get a high-quality service from such carers' centres.
The national strategy for carers contains a great deal of information about carers and their needs, but we lack information in some cases. That is why we will introduce a new question about carers in the 2001 census. The results of that new question will tell us, for example, how many carers are in each local authority area. The information will allow local authorities to plan much better how to provide services for carers in order to meet their needs.
The Government believe that what carers do should be properly recognised and supported. We—the Government—and the whole country should take pride in carers. The Government are determined to make sure that

carers can feel proud of what they do and of a society that recognises the debt of gratitude that we all owe them for doing it.

Mr. Philip Hammond: I thank the hon. Gentleman for his statement and for his courtesy in letting me have a copy of it in good time. The Opposition welcome any additional support for carers—the great silent army that, quite literally, props up our social care system. We believe that the family is the best mechanism for delivering support to the elderly, the disabled and the frail wherever that is a practical reality.
To support those family carers who give of their time so selflessly is not only a moral obligation on society but the most basic form of economic common sense. Care in the family, where that is possible, is often the best solution for a vulnerable person and for society as a whole. However, we recognise that those benefits have too often been at the expense of the carers. We welcome the tone of the hon. Gentleman's statement, but as so often, there is a gap between the rhetoric and the reality. Much of the statement is a recycling of announcements that have already been made, and still more of it consists of an announcement of further consultation.
Carers come in all shapes and sizes and we cannot generalise about them. However, we know that the majority are women, many of whom are married. The Government's tax and benefits policies have hit single-earner couples—who already bear a disproportionate share of the tax burden—particularly hard. Should the Government not consider the advantages of transferable tax allowances to ease the burden on those couples where one partner voluntarily gives up the opportunity to earn in order to take on a caring responsibility?
Many carers are pensioners and still more are seeking to make pension arrangements for their retirement while continuing their caring responsibility. The Government have announced a further consultation on second pensions for carers that might lead to carers being £50 or so better off in 2050. At the same time, the Government have hit all pensioners with their £5 billion pension tax and the poorest small savers—of which 300,000 are pensioners-through their mean-minded abolition of dividend tax credits for non-taxpayers.
It is a case of jam tomorrow and nothing today. Which generation of carers is the Government's policy supposed to help? What can the hon. Gentleman say to carers who are 40, 50 or 60 today and have made inadequate provision for their retirement?
The hon. Gentleman has recycled earlier announcements of £750 million for promoting independence and £375 million for vulnerable children. The rhetoric from the Dispatch Box about the improved co-operation between health and social services, the legal duties of partnerships, and the demolition of Berlin walls sounds impressive, but health authorities and social services departments, certainly in London and the south-east, are experiencing squeezed budgets—the hon. Gentleman's rhetoric will ring hollow there. With the best will in the world, the grand vision cannot be realised in areas where the resources available are under concerted attack by the Government.
The ring-fenced special grant for respite care is welcome. The chance of a break from their responsibilities is probably the need most often cited by


carers, but in many areas, social services departments and health authorities are already cutting back on the support that they are able to give to the voluntary sector. So long as budgets are under such pressure, how can the Minister ensure that the ring-fenced grant does not merely substitute for existing funding, often via voluntary organisations that currently provide respite care?
I have a couple of specific questions, and I should be grateful to the hon. Gentleman for responses to them. I particularly welcome his reference to young carers. Many young carers projects are doing excellent work throughout the country but are precariously funded. Local authorities facing difficulties of their own are often unable to fund worthwhile voluntary organisations. For example, the joint finance funding that supports the Sheffield young carers project will run out in March 2000 and the national lottery grant that supports the project will run out in September 2000. There will be no more joint finance for that project because the Government have abolished joint finance from next year.
What assurance will the Minister give the Sheffield young carers project about the security of its funding for the future? Will the Minister identify where the additional funding that he has announced today for the ring-fenced grant will come from? How much will come from sums that have already been announced within other spending totals, and how much is new money?
We welcome the emphasis that the Minister placed on carer-friendly employment policies. Do the Government have concrete proposals specifically dealing with carers to encourage such policies on the part of employers, public and private; or will the hon. Gentleman rely on exhortation?
There was no mention in the statement of training for carers, which the hon. Gentleman will agree is important. I should be grateful for his comments on support for training for carers.
We welcome the focus that the statement places on the needs of carers. We support the principles that the hon. Gentleman has outlined, but in many cases and for many people, what he has announced today gives back with one hand what the Government have already taken away with the other. How will the fine words translate through the mechanisms of budgets, health authorities and social services departments into benefits for carers?

Mr. Boateng: I welcome the hon. Gentleman's response in so far as it went, but it did not go far enough and sounded increasingly churlish towards the end. He referred to a gap between rhetoric and reality. There is a gap—it is the Conservatives' gap and it lasted 18 long years. We are now filling that gap by making changes to carers' lives and delivering what they are entitled to expect by way of society's recognition of the debt of gratitude that it owes them.
That means a new emphasis by the NHS on training, and the NHS will be taking that on board. Much of what we can do to help carers is practical, sensible and long overdue. One example, which the hon. Gentleman ought to recognise, is the problem of back pain for carers which could be overcome if they were better trained in lifting. At the moment, that is not done. My hon. Friend the Under-Secretary of State for Health will ensure, as he takes the strategy forward, that it is done.
The hon. Member for Runnymede and Weybridge (Mr. Hammond) asked about money. We are only too happy as a Government to take pride in the fact that, next year, spending on social services will increase by £503 million. That is new money, which would not have been provided if that lot on the Conservative Benches had been in power. In addition, we announced today £140 million of new money for practical policies to support carers. That is why the Carers National Association has described this strategy and this Government's approach as a momentous leap for carers. That leap came with Labour; carers would have got nowhere under the Tories.

Mr. Tom Clarke: Is my hon. Friend aware that nothing said from the Opposition Benches can detract from the excellence and warmth of his statement, which I think will appeal to millions of carers in Britain? Has departmental consultation included the Scottish Office, the Welsh Office and our colleagues in Northern Ireland? May I remind him that a section of the Disabled Persons (Services, Representation and Consultation) Act 1986 deals with carers? The previous Government had 11 years to implement it, but did not. I hope that my hon. Friend will consider it helpful in coinciding with and encouraging the main thrust of his excellent statement.

Mr. Boateng: I thank my right hon. Friend for his kind words of welcome. He brings enormous expertise to this area, not least from his period as our spokesperson on disability matters. He will be glad to know that we are in close contact with right hon. and hon. Friends in the Scottish Office, the Welsh Office and the Northern Ireland Office, all of whom have contributed to the development of the national strategy. I have no doubt that they will bear in mind his points when matters are advanced in the devolved Parliament in Scotland and the Assemblies in Wales and Northern Ireland.

Mr. Paul Burstow: I thank the Minister for his courtesy in allowing us to look at the statement and the strategy before his announcement. We very much share the view that carers play a vital role which, for too long, has been given inadequate and insufficient attention. Much good practice in the national strategy needs to become the norm. Gathering it together in this one place and highlighting the gaps is a very welcome initiative, which we on the Liberal Democrat Benches certainly support.
We must consider not just the fact that carers save the nation £3 billion, but that they bring an extra quality of life to the loved ones whom they look after and support. Does the Minister therefore accept that the strategy's success hinges on the many thousands of people who are carers but remain uncounted and unsupported? How will the strategy address those hidden carers, about whom the agencies do not yet know? As many as eight out of 10 carers have not yet been assessed by social services departments. How will the Government ensure that such assessment proceeds apace, given that, on Treasury figures, social services departments will be £100 million short in their core budgets in the coming year? How can support and assessment go forward on that basis? I would be interested to hear the Minister say how.
Millions of pounds of benefits to which carers are entitled go unclaimed each year. Will the Minister therefore look again at how, through partnership with


local government, about which the Government often talk, and through local authority mailing and the Benefits Agency, we can ensure increased take-up of council tax carers discount, which is going unclaimed in very large amounts?
The tax and benefits system penalises carers, and the rules for invalid care allowance do not recognise the extra and on-going costs of caring. The strategy says nothing about reform of the invalid care allowance. When will Ministers outline much needed and long overdue reforms to that benefit, turning it into a genuine carer's benefit?
Will the Minister accept that the Government have raised expectations today? They should raise expectations that there will be new initiatives to support carers—they are long overdue. However, today's statement, at its most generous, gives carers an extra 15p a week. I hope that the Minister will recognise that 15p a week may be being oversold today, and that the Government are underfunding carers' needs.

Mr. Boateng: Call me partisan, but it would have been nice to receive at least a word of recognition and thanks from the hon. Gentleman for the £496,000 of new money that we are giving his local authority to meet the needs of carers—money that it would not have had before.
However, the hon. Gentleman makes some serious points. We do regard the collection of information about carers' needs as a priority. Some 60 per cent. of carers have no contact with other agencies as carers. Many do not recognise themselves as carers. We must find new ways of reaching out to them, to ensure that they get their due. We are introducing a census question to give us a better handle on where carers are and what their needs are. That is a small, practical measure; why was it not taken years and years ago?
We do not intend to leave it at that. We intend the NHS and social services to work alongside the voluntary sector and with the private sector to present these issues, especially on carers and employment. We envisage that a promotional campaign on carers and employment, led by the Under—Secretary of State for Education and Employment, my hon. Friend the Member for Barking (Ms Hodge), will make an important contribution to the initiative.
We are therefore not only making available new money, which is not, as the hon. Member for Sutton and Cheam (Mr. Burstow) would suggest, inadequate, but ensuring that a raft of policies is put in place to meet carers' needs; even more important, we are ensuring that, as new policies are developed in this and other areas, carers' needs are at the heart of what we do, in addition to the needs of patients and users.

Mrs. Gwyneth Dunwoody: Is my hon. Friend aware that this is the first attempt in a targeted and vigorous manner to reverse years of neglect of carers, and, as such, it will be warmly welcomed by those who find themselves in that position? Tonight, many people will be very grateful to him and the Government for what he is trying to do. Will he, however, ensure that he does not follow a wholly unacceptable Tory practice? Will he pay careful attention to those carers who currently

receive voluntary support, if it is available, but who may need much more professional help? Will he promise me that he will look at how things are working?

Mr. Boateng: I am much obliged to my hon. Friend. Of course she is right. We must ensure that we have the sort of professional interventions that are necessary to meet carers' needs, and we must recognise the value of partnership between the voluntary sector and the statutory sector. It is a question of ensuring that each contributes that which it is best equipped to give, and we shall ensure that that is done. We have also learnt from the voluntary sector that there exists, in the wider community, a degree of commitment to and wisdom about the practical needs of carers which we need to make better use of in the statutory sector. I promise my hon. Friend that this Government—her Government, our Government—intend to do so.

Sir Nicholas Lyell: Will the hon. Gentleman accept that we on the Opposition Benches strongly welcome all genuine extra support for carers, and that in so far as his statement provides it, we welcome it? However, before history is rewritten, will the hon. Gentleman be kind enough to write to me to confirm the many billions of pounds of extra money every year that were provided by the previous Government over 18 years? I remember vividly when I was a junior Minister with responsibilities for social security that by 1987 the sum had risen to an extra £6 billion a year for disabled people and their carers.
Will the hon. Gentleman confirm also that, taking the latest local authority settlement, Bedfordshire county council, for example, must find an extra £10 million worth of cuts before it begins because of the money moved away from counties such as Bedfordshire? What will the hon. Gentleman say to carers such as members of the Biggleswade carers society, who are deeply anxious, and rightly so, that there should be extra care with respite support? How often per year, per three years or per five can they expect some practical help from this extra money, which seems to come to less than £10 a year for a carer?

Mr. Boateng: The right hon. and learned Gentleman seems to be suffering from a degree of amnesia in this area. It must be said in fairness that right hon. and hon. Members on the Opposition Benches singularly failed when they had the stewardship of our nation's affairs to give carers the focus that they are now being given. The right hon. and learned Gentleman must at least own up to that. I hope that he will point out to the good folk of Biggleswade in his constituency that they will benefit from an additional £836,000 that they would never have received had he continued to sit on the Treasury Bench—and for that they should be thankful.

Mr. Malcolm Wicks: This is an historic day for Britain's carers. It is a special and important day for 6 million people who provide care worth more than £30 billion. Does my hon. Friend agree with me that when he meets carers he is struck by their extraordinary sense of responsibility and duty and by the fact that for that they often pay a price in terms of extraordinary stress, poverty in old age and sometimes physical or mental breakdown?
Given that the great thing about the document produced by the team so ably led by my hon. Friend is its cross-departmental nature, will he nevertheless give heed to the work of Florence Nightingale, who once observed that reports are not self-implementing? Although there are good things in the report that are very specific, much of the rest of the document properly relies on aspirations, good practice and the rest.
Will my hon. Friend therefore consider, not necessarily today, how we can monitor this great comprehensive strategy so that this Parliament and carers can be certain, as Opposition Members have said perfectly properly, that good rhetoric is matched by good practice, as I expect it to be?

Mr. Boateng: The whole House always listens closely to my hon. Friend on matters relating to carers, knowing full well his enormous contribution, in the form of private Members' legislation and subsequently, to their welfare. He makes an important point about the contribution of the entire ministerial team across government to the development of this strategy. I pay tribute to the members of that team and to their officials for the contribution that they have made.
I have no doubt that my hon. Friend the Under-Secretary of State for Health, who will be carrying forward the strategy, will want to ensure that the commitment and drive are continued. There is no doubt about the commitment of my right hon. Friend the Prime Minister to carers' needs and concerns. My hon. Friend need have no fear; Florence Nightingale is an example to us all and the wick in her lamp will not be allowed to burn itself—[Laughter.] Well, it is a try. It will not be allowed to burn itself out. If it seems that it might, I have no doubt that my hon. Friend will be there to keep it alight.

Mrs. Angela Browning: Will the Minister recognise that, although he is right to say that a proper assessment of need throughout the country should be undertaken, in some parts of the country that process has already been taking place? Many carers have been at meetings, filled in forms and identified their needs.
Will the hon. Gentleman ensure that the resources that he has announced today are not sapped by yet more forms designed to ascertain what I am sure many social services departments already know but fail to deliver? Will he recognise that one of the greatest pressures on carers is applied if the needs of the people for whom they are caring are not appropriately met? Around the country, social services departments are making those people pay for services that they previously received free of charge. That will be a terrible pressure on the people who look after them.

Mr. Boateng: The hon. Lady speaks with a great depth of knowledge and is respected in all parts of the House for her contribution to caring and carers. I am grateful for her remarks.
We must make sure that we get right the mechanisms for consultation with carers. That has not always been done as well as it ought to be. Part of our strategy for getting health and social services to work that much better together is to make sure, for instance, that the work being

done in relation to health improvement plans and the role of primary care groups and GPs is informed by carers' needs, concerns and opinions.
The hon. Lady is right. We need to improve consultation. We shall make sure that the additional resources being brought to bear on the problem are spent wisely and effectively, and that the spending is properly monitored. That is why I set great store by the new accreditation scheme mentioned in the national strategy. It will involve the voluntary sector in accrediting carers centres to make sure that the public get value for money. That is extremely important. I accept entirely the hon. Lady's point about the importance of consultation and the need to make sure that carers are central to it.

Mr. Tam Dalyell: I welcome what was said about young carers. Some of us, at our surgeries, are simply appalled by the pressures put on youngsters of 12, 13 or 14 who have to undertake caring duties, often for single-parent families, that make the mind boggle. What is meant in the statement by the words:
We shall encourage schools to make sure that there is someone to support them. That need not be a teacher—it could be someone else"?
Have there been discussions with the teaching unions about that?
The statement goes on:
Children who are carers may need help to contact professionals in the health service, the social services, or a local project".
What will be done to help local authorities in this matter?

Mr. Boateng: My hon. Friend is right to highlight the special needs of young carers. We want to make sure that we do not impose a straitjacket on the way in which a school determines that those needs should best be met. Someone in the school office, with an administrative grasp and overview, may be better placed than a teacher to see the entire picture and to make sure that the form master or mistress is aware of the young carer's needs. That concern may initially need to be addressed centrally.
The Under-Secretary of State for Education and Employment, my hon. Friend the Member for Barking (Ms Hodge), and my right hon. Friend the Minister for Public Health have particularly in mind a role for the school nurse and for the school, as part of its wider liaison with the NHS, to pick up the special health needs of young carers.
Of all the individuals and groups whom I have met during the preparation of the strategy, none have impressed more than young carers—eight-year-olds and sometimes even younger children who take responsibility day in, day out for the care of a parent. The least that we can do is to ensure that they get support in doing that.

Mr. Elfyn Llwyd: The document is most welcome and plugs an important policy gap. Following on from the previous question, would it not be better if there were a slightly more rigid approach to assistance for young carers via the school? Leaving it to individual schools may not be adequate. For example, there are many schools without school nurses. The circumstances are so varied. Would not central monitoring be preferable, to look at each situation as it develops?

Mr. Boateng: My hon. Friend the Under-Secretary of State for Education and Employment is certainly


concerned to ensure that the guidance and the guidelines that we put out to schools refer to the needs of young carers. We are currently consulting—not only as part of the Green Paper process, but directly in relation to this strategy—the unions and others about the form that that guidance should take.
The flexibility within the school community is important, and I am sure that the hon. Gentleman wants us to bear that in mind, but we need to ensure that schools get a handle on the problem. There may be, in the fulness of time, room for the inspectorate—and, indeed, for the local authority—to engage in that process; but, first, it is vital that we get out guidance that meets the needs of those young people. They are not being met at the moment—we recognise that—but all concerned are determined to change that.

Mr. Vernon Coaker: Across the country there will have been a sigh of relief among carers in respect of the statement, which supports them in their most valuable work. Will my hon. Friend ensure that the work of the voluntary sector—and groups such as the Gedling Take-a-Break Carer group and the Alzheimer's Disease Society, which work alongside groups with statutory entitlements—is supported? The invaluable work that those organisations do to support carers and those in need of care cannot be underestimated. We need to ensure that their valuable contribution is fully recognised in any proposals.

Mr. Boateng: I had the opportunity to meet representatives of the voluntary sector in my hon. Friend's constituency when I was in Gedling a couple of weeks ago. I was struck by the strength of local infrastructure, in relation not only to caring but to a wide range of initiatives that required better and closer partnerships between the statutory and the voluntary sectors.
We need to build on the experience of these organisations—not only the Alzheimer's Disease Society, which my hon. Friend mentioned, and the Parkinson's Disease Society, but Crossroads, the Carers National Association and the Princess Royal Trust for Carers. Those organisations were doing such work long before it became fashionable and when carers' needs were by no means centre stage, as they are now. They have developed expertise and they bring to this area something that, in my view, only the voluntary sector can bring. We have to make sure that they receive the recognition and support that is their due; my colleagues on the Front Bench and I will be doing just that.

Mrs. Virginia Bottomley: I, for one, want to welcome a statement on carers. Recognition of carers and their interests is essential, and for the Government to play to their strengths and to be involved in promotion and publicity in this area is a step forward in itself.
I declare my interests, which go back 20 years, although they do not go back 30 years to the Rev. Mary Webster. For many years, I was the late Baroness Sear's vice-chairman at the Carers National Association, and am currently a vice-president. I am president of the Isle of Wight branch, which I founded, and am closely involved in the Guildford and Waverley branch.
There is a crisis of confidence, and I ask the Minister to take one specific step. Please will he write to me setting out the detail of how the home counties, and Surrey in particular, are to cope? They have had the £6 million transitional grant for community care confiscated and their increase for health is the lowest in the country. People are living longer and many live alone. The error that they commit is to be healthy and long lived. That penalises them in the Government' s funding formula, and the anguish at present in Surrey is such as I have never previously known it.
I welcome the statement, but please will the Minister—to clarify that point—respond to me, identifying how Surrey is to cope in the light of the savage social services and health settlements?

Mr. Boateng: The new partnership grant does not represent the confiscation that the right hon. Lady suggests. That, if I may say so, is a travesty of the truth and does her little credit.
Of course I recognise the right hon. Lady's commitment and contribution, over many years, to this particular subject. I will certainly write to her. I have had the opportunity of visiting carers in Surrey and have formed a clear view of the considerable contribution that the voluntary sector makes.
I have good news for the right hon. Lady. The programme of work that we are initiating in this area has the support of those engaged in care in Surrey and elsewhere. There is no crisis of confidence in the Government's determination to put social services on a secure foundation—which they singularly lacked under the right hon. Lady's stewardship—and to take forward this initiative and agenda for carers. This important step must not be undertaken in an atmosphere of party political acrimony, so I am only too happy to write to the right hon. Lady.

Mrs. Sylvia Heal: I welcome the statement and congratulate my hon. Friend, his team of Ministers and the many carers who contributed to this strategy and to the document. In addition to their caring roles, they are often called upon to participate in policy making, which they welcome and which proves to be of value.
I am particularly pleased that, at long last, the position of children and young people who are carers is being recognised. Perhaps it is right to declare an interest: immediately before coming to the House, I was employed by the Carers National Association. I am pleased that its campaigning work, along with other organisations, has at last brought about this important step.
When the census forms are completed, will young people undertaking caring roles in the family be identified? If adult carers have been the hidden army, young people have been even more disguised and lost in the system.
The Government are encouraging awareness raising by other Departments. Will the Minister ask his colleagues in the Department of Health to ensure that GPs and primary health care workers participate in the training programme? In many cases, a carer's first contact is the family doctor or the district nurse.

Mr. Boateng: My first memories of my hon. Friend were of someone who was leading the voluntary sector's


work with carers, especially young carers. She is right about the need to get better at identifying young carers. We hope and believe that the census question will assist in that, but it is important also to recognise the role that GPs, health visitors and other health professionals can play in helping us to identify young carers. Young carers are more willing to approach those people and share their concerns with them, because they are not seen as judgmental or likely to raise the possibility of social service intervention, which young carers fear.
We must use health service and other professionals, and we must give young people a sense that they can identify themselves as carers without anyone being judgmental of them and their parents. Young carers have told some horrific stories. This morning at No. 10, a young carer aged nine told of being stood up in front of a class and identified as a carer, which was the last thing on earth she wanted to happen.
We must ensure that when we identify young carers we respond to them sensitively. We must encourage them to come forward to get the help that they so richly deserve.

Mr. Andrew Rowe: The Minister will know as well as anyone that one of the most useful things for carers is to be able to count on relatively simple but regular substitution or assistance, so that they can have some respite to go to the hairdresser's or whatever. The Minister may also be aware that there is an increasing determination among the Churches of this land to make themselves a great deal more effective in intervening to assist their communities—this strategy being based around the millennium.
Will the Minister undertake to consult the Churches at this early stage in their plans, to establish the extent to which regular, reliable, voluntary assistance can be built into those plans? By doing so, he will make available possibly as many as 5 million volunteers.

Mr. Boateng: I entirely accept what the hon. Gentleman has said. Indeed, last Friday I had the privilege of presenting our strategy to His Grace the Archbishop of Canterbury, who received a copy of our document today. We have embarked on the process. We see the Church and, indeed, other faith bodies as partners in the task. They are already doing great work, and together we can do even better.

Point of Order

Mr. Nick Hawkins: On a point of order, Madam Speaker, of which I have given you notice. As you know—you have been in the Chair on a number of occasions when I have raised the matter here—one of the biggest issues in my constituency is the future of the building housing the staff college, which is probably one of the most significant military sites in the world.
Over the past 20 months, I have repeatedly asked Ministers, in both written and oral questions, about their plans for the building's future. Initially, I received a series of answers saying, "We will let the hon. Gentleman know shortly": it was always "shortly, shortly, shortly". Then, about six months ago, the nature of both oral and written answers changed. The Secretary of State and other Ministers said, "No plans have yet been put to Ministers."
It was therefore with considerable shock that, last Friday, my constituents and I read the main story on the front page of our local newspaper. According to that story, there was a proposal to consider converting the staff college into luxury flats or a corporate headquarters. Not only is the building on a secure site, and enormously significant because the royal military academy, Sandhurst, is next door to it—the secure area covers the whole site—but it contains war memorials. A Ministry of Defence spokeswoman is quoted extensively.
I thought that you, Madam Speaker, might have had an indication that a Minister might wish to apologise to the House for the fact that the news emerged from an MOD spokeswoman who was quoted in the press, and for the fact that no information was given to the House of Commons, the other place or the constituency Member involved, namely me. Can you tell me, Madam Speaker, whether you have had any such indication, or how I can best pursue the matter on behalf of my constituents, who are very angry?

Madam Speaker: I am grateful to the hon. Gentleman for giving me some idea of his point of order, and for allowing me to see the press report to which he has referred. As he and the House know, I make no comment on press statements or press reports, nor am I aware that a Minister is ready to make a statement on the matter in the House. I am, however, aware of the questions that the hon. Gentleman has asked. My guidance is this: he should continue to ask questions in the House, or raise the issue on the Adjournment. He must pursue the issue by parliamentary means.

BILL PRESENTED

ACCESS TO ENVIRONMENTAL INFORMATION BILL

Mr. Matthew Taylor, supported by Mr. Alan Simpson, Mr. Peter Bottomley, Mr. David Chaytor, Mr. Cynog Dafis, Mr. Norman Baker, Mrs. Helen Brinton, Mr. Andrew Stunell, Mr. David Lepper and Mr. Jeremy Corbyn, presented a Bill to extend the right of citizens to information concerning certain activities which may affect the environment; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 26 February, and to be printed [Bill 41].

Orders of the Day — Social Security Contributions (Transfer of Functions, Etc.) Bill [Lords]

Order for Second Reading read.

Mr. Quentin Davies: On a point of order, Madam Speaker. Before we start the debate, I should draw your attention to a rather serious matter. The explanatory notes relating to the Bill, which have been distributed throughout the House, contain the following important statement:
The Chancellor of the Exchequer announced in his Budget speech on 17 March that the CA"—
the Contributions Agency—
and its operational functions would transfer from the DSS to the Inland Revenue in April 1999".
The notes continue on the basis that the decision has already been made.
Once again, the Government are taking Parliament for granted. They assume that they can announce decisions when Parliament has made no such decisions. Would not a slightly greater degree of democratic modesty be becoming on the part of the Government, even if they do have a vast majority at present?

Madam Speaker: The hon. Gentleman is aware that that is not a matter for the Chair.

The Secretary of State for Social Security (Mr. Alistair Darling): I beg to move, That the Bill be now read a Second time.
As the hon. Member for Grantham and Stamford (Mr. Davies) says, the Chancellor of the Exchequer announced in his last Budget statement to the House that the Contributions Agency would transfer from the Department of Social Security to the Inland Revenue in April 1999. He did so because it is normal to announce such things in Budget statements to the House. Most impartial observers will think that the Chancellor did entirely the right thing.

Mr. Davies: Will the right hon. Gentleman give way?

Mr. Darling: Not at the moment.
The transfer that the Chancellor announced is provided for by the Bill. Perhaps I will give way now because I want to refer to something completely different, as they say.

Mr. Davies: It seemed the right moment to intervene again to try to set the record straight. What the Chancellor actually said in his Budget statement, perhaps ill-advisedly, was that he had already agreed with the right hon. Member for Camberwell and Peckham (Ms Harman), the right hon. Gentleman's predecessor, to make that transfer. Presumably, the Chancellor did not realise at the time that primary legislation would be required, which the Government are now introducing. Now that the

Government have discovered that such legislation is required, it is not for them to assume what Parliament's decision on the Bill will be.

Mr. Darling: If the hon. Gentleman looks at the accompanying press releases that are traditionally issued with Budget statements, he will find that it was always anticipated that primary legislation would be required, so that is not a good point. Perhaps he has some other points to raise in the debate. I hope that they are better than that one.
The House will be aware that, at the moment, national insurance contributions are administered by the Contributions Agency, which is part of the Department of Social Security. Income tax is administered by the Inland Revenue. The reason that NICs are collected separately from income tax goes back to the origins of the modern welfare state. Those historical divisions are no longer sensible.
In 1948, workers did not begin to pay tax until they were close to average earnings. On the other hand, national insurance was designed as a universal, flat-rate scheme, so nearly all workers paid their national insurance stamp. Many had no contact with the Inland Revenue.
Two developments have changed that. First, in 1961 and again in 1975, contributions by employees and employers became earnings-related. Because of that, a majority of NICs began to be collected under the pay-as-you-earn system. Profit-related class 4 NICs for the self-employed were introduced and collected alongside schedule D income tax. As a result, the Inland Revenue now collects 94 per cent. of NICs and the Contributions Agency collects only about 6 per cent. of NICs, principally the flat-rate class 2 charge on the self-employed.
Secondly, more and more of those paying NICs are also paying income tax. Eighty per cent. of employees who pay NICs also pay income tax.

Mr. Andrew Rowe: Surely the right hon. Gentleman is really admitting what Governments of all persuasions should have been prepared to admit many years ago, that the term "national insurance" is a complete con. It was never a serious insurance scheme. It has never provided any serious insurance against misfortune. It was merely a form of taxation, whatever its original intentions were. Would it not be more sensible to abolish the term altogether?

Mr. Darling: As the hon. Gentleman knows, the national insurance system, which was established in 1948, was conceived by its authors as a type of insurance. Of course, it is not insurance as most people understand it today, in that it is funded as a pay-as-one-goes system. The contributions that are paid today depend on the taxpayers of today, not on contributions that were paid perhaps 10 or 20 years ago, but the idea was that, if people paid into the national insurance fund, they would receive certain benefits.
Of course, most of the benefits that people receive are pensions; the vast majority of the contributions go on them. The national health service, which I suspect many people think is partly funded by national insurance contributions, is financed largely by current taxation. However, that is not the point that I am arguing today.
All I am saying is that, although one can understand why historically, over the years, national insurance contributions and tax were treated differently, I do not believe that the case for such treatment endures.
The hon. Member for Faversham and Mid-Kent (Mr. Rowe) said that successive Governments have perhaps not rationalised the system. I do not disagree with him, but whether previous Governments were, at the time, right not to rationalise does not matter. The point is that, today, the current Government are dealing with what we consider to be an anomaly. Moreover, the developments that have led to closer co-operation between the Contributions Agency and the Inland Revenue have made change necessary.
Closer co-operation has already brought some benefits to business. For example, a joint annual information pack has been provided for employers and a single leaflet and registration pack has been provided for the newly self-employed. However, such benefits can take us only so far. Employers still have to deal with separate Departments on their tax and national insurance contribution queries. The Government therefore believe not only that we can go further, but that we should go further.
In our Green Paper on welfare reform, we stressed the importance of a modern system of delivering government—a system that is not only flexible and efficient but easy for people to use. Too often, our current procedures are designed for the convenience of government and not for the convenience of the public.
Employers do not understand the logic of keeping separate the administration and structure of national insurance contributions and tax. Just over 1 million employers are liable to pay national insurance contributions for their employees, and have to deduct both tax and national insurance contributions from employees' pay. However, they have to cope with two separate sets of rules. Moreover, if they have questions, they have to deal with two separate Departments. Those starting out on their own—perhaps starting up their own business or in other self-employment—also have to deal with separate Departments on tax and on national insurance. I therefore believe that the case for change is overwhelming.
I should tell the hon. Member for Faversham and Mid-Kent that Ministers are not the only people who believe that change is inevitable and right. Last week, in the Opposition Supply day debate on pensions, the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) had some fun with the fact that, for some reason, my name had not been included in the list of those who supported the Government amendment to the Opposition motion. I can tell the House that whoever was responsible for the omission was, apparently, very contrite about it—not that it bothered me. Nevertheless, as the hon. Gentleman raised the point, I thought that I should take the trouble—which, I must confess, I do not always take—to read the Opposition's so-called reasoned amendment to today's motion. I noticed that one name was missing from their list.
The omission struck me as curious, given the nature of the proposals to transfer the Contributions Agency. Moreover, when I noticed the missing name, I was reminded of the deregulation task force, which was established by the previous Government. I therefore looked at the task force's report for 1994–95—here it is,

with a nice red strip across it, and with an illustration of scissors cutting red tape—and found something very interesting. On taxation and national insurance, the report states:
Ministers should commit themselves now to a merger of the field forces of the Inland Revenue and Contributions Agency. Apart from saving public money, this would eliminate the burden of double accountability and interference for employers, and reduce the time needed to cope with workplace taxation.
It continues:
This issue has been endlessly debated in Whitehall. A decision should be made now.
That is all good, sensible stuff.
As I thumbed through that piece of bedtime reading, I was interested to see that, on page 3, it was signed by someone called "Maude". I began to ask myself whether that was not the same Maude who is now the shadow Chancellor. It was the very same one—the right hon. Member for Horsham (Mr. Maude)—and his name is not listed in support of today's Opposition amendment. I suspect that it has been omitted because the shadow Chancellor—having so cogently made the case for transfer only a couple of years ago—might be in some difficulty if he included his name in favour of an Opposition amendment that opposes the transfer of the Contributions Agency.
It is curious that Conservative Members oppose the Bill whereas it was not opposed in the other place—where, as we know, the Conservatives have a 3:1 majority over Labour. What is more, its thrust to transfer the Contributions Agency to the Inland Revenue was warmly endorsed by the shadow Chancellor when he was formulating the deregulation task force. Why are those Members opposing it today? It is clearly because of the difference of opinion between the shadow social security spokesman and the shadow Chancellor. I read that the Leader of the Opposition is off to America to look for some good ideas. That is not surprising. Before he goes, perhaps he might like to end the confusion among his colleagues, who clearly do not know whether they are coming or going.

Mr. Iain Duncan Smith: There is no confusion. My right hon. Friend the shadow Chancellor will demonstrate that when he votes tonight. [HON. MEMBERS: "Where is he?"] I am sure that he wants to join us as soon as possible, but he has been somewhat delayed.
In 1995, my right hon. Friend the Member for North-West Hampshire (Sir G. Young), now shadow Leader of the House, comprehensively dismissed the argument once he had looked at it, saying that it was not feasible or worth while. The Secretary of State should check Hansard a little more rigorously.

Mr. Darling: I am sorry if yet another Conservative has sought to rubbish the good work done by the right hon. Member for Horsham. What was good enough for him in 1995 must be good enough for him today. I dare say that even now frantic telephone calls will be going out to get the man into the Lobby tonight, perhaps to spare his blushes. If he is watching the debate on the monitors, he will see that there is plenty of room on the Conservative Benches. If this is a great issue of principle for the Conservatives and they think that what we are


doing is wrong, evil and an example of the heavy-handed government that they are always criticising, more of them should have turned up. I understand that they are having trouble getting speakers.

Mr. Duncan Smith: There are not many Labour Members here.

Mr. Darling: As ever, my right hon. and hon. Friends agree with what the Government are doing. Whatever the Government are doing, they are right behind us.
The Government's proposals are supported by business across the board. The Institute of Directors, the Chartered Institute of Taxation, the British Chambers of Commerce and the National Association of Pension Funds—

Miss Anne McIntosh: rose—

Mr. Darling: I shall give way in a moment. All those organisations believe that the Bill will reduce burdens on business and individuals by enabling them to sort out their taxes and contributions through a single organisation. Will the hon. Member for Vale of York (Miss McIntosh) tell us what is wrong with easing the burdens on business and simplifying the way in which the Government go about their business?

Miss McIntosh: I do not wish to detract from the speech that I hope to make later. Will the Secretary of State help me? We seem to be reading different messages from the same businesses. The same United States companies that he believes welcome the Bill have told me that if the programme is on PAYE the Government must make a contribution to the cost from the money that they will be saving. Giving evidence to the Social Security Committee for its first report of this Session, the Institute of Directors clearly said that the measure would be an unacceptable burden on business. Some of us referred to that last week. Are the Government considering an alternative to putting such a burden on business through PAYE?

Mr. Darling: I may be wrong—if I am, I shall deal with the issue later—but I think that the Institute of Directors was talking about a different measure. The IOD thinks that bringing together the Contributions Agency and the Inland Revenue is good because it lifts burdens. It is easier for business to deal with one body rather than two. The Bill will also enable the two Departments to combine their efforts to improve their service to customers, which is important.
Although full operational integration in both Departments will take some time, plans are already in place to improve service. Employers will begin to see a better service from April. They rightly complain about getting two visits to check their payroll records from inspectors who ask much the same questions—one from the Contributions Agency and one from the Revenue. From April, we shall provide a single audit examination of PAYE and national insurance contribution records. We are also integrating customer assistance teams from both Departments from April to support business while

providing unified training and education on tax and national insurance contributions. We shall produce single leaflets on both matters from April.

Mr. Steve Webb: I am sure that the Secretary of State is familiar with the work of my former colleagues at the university of Bath on the burden of income tax and national insurance on firms. Firms said that most of all they wanted a single tax—not just unified administration, which we welcome, but one tax in place of two sets of rules. The Bill is a welcome step towards that. How much further down that track does the Secretary of State expect to go?

Mr. Darling: All that the Bill does is to integrate the administration of national insurance. As I have said on a number of occasions, the Government are looking at the contributions system, and any reform would have to await the conclusion of that study. In the meantime, this is simply an administrative measure—I make no bones about it. This highly technical Bill will improve the administration of government and lift burdens on business. Those are the driving forces behind it. The Government are always studying the contributions system, but the Bill is not a part of that process.
We are improving the service provided to business and, in addition, we will extend access to the information available in Inland Revenue tax inquiry centres and elsewhere so that national insurance information will be available in more than 300 extra local centres this year. We are looking also at improving the specialist helplines so that we can deal with both tax and national insurance inquiries in one call.
Finally, we are unifying the appeals process so that if someone has a dispute about his tax or national insurance—which is often the same issue, and often concerns whether someone is employed or self-employed—he will be dealt with under one appeal. The reforms have been much sought by business, and they are in line with the recommendations of the tax law review committee, whose work we supported in opposition and continue to support now that we are in government.

Mr. Archy Kirkwood: Anyone looking at the reply that the Secretary of State gave to my hon. Friend the Member for Northavon (Mr. Webb) could draw a strong inference that the Bill was only a first step, and that the national insurance contributory principle was under scrutiny by the Government in the longer term. What is the Government's long-term intention for the principle? Is the Bill part of longer-term reform, or is it tying up what the Secretary of State has reasonably described as a series of anomalies which may need attention?

Mr. Darling: I will turn to that in a moment. The transfer is entirely independent of any other consideration. It is necessary and desirable on its own merits, and that is why we are pressing ahead with it. As far as I know, only the Conservative Opposition are opposed to it. They are entitled to take that position—they do not mind being on their own on the outer fringes of acceptable opinion. They have every right to be there, and I am quite happy to leave them there.
On policy transfer, the position has changed in the past week or so. Bringing the Contributions Agency and the Inland Revenue together still leaves different Departments responsible for policy. We have decided to transfer policy responsibility for national insurance contributions from the Department of Social Security to Treasury Ministers and the Inland Revenue.
At the time of the last Budget, my right hon. Friend the Chancellor made it clear that we intended the Contributions Agency to transfer this April, at the start of the new financial year. However, we did not then propose a date for the transfer of national insurance contributions policy functions.
I have decided that the simultaneous transfer of operational and policy functions is necessary. It is undesirable to consider whether a matter is operational or policy before determining which Minister is responsible for it. Simultaneous transfer will mean clearer accountability to the House. The explanatory notes to the Bill say that the transfer of policy responsibility will take place from an appointed day. I can now tell the House that that appointed day will be 1 April.
The Chancellor and I will continue to have access to each other's officials for developing and discussing policies. However, by transferring those officials who develop and manage policy on national insurance to the Inland Revenue, business and other representative bodies will be given one focus for the discussion of improved legislation, procedures and guidance.
Business is rightly concerned about the technical differences in tax and national insurance contributions practice and law that add complexity and increase costs. We want to consider the scope for further alignment in discussions with representative bodies. As a first step, we have already announced a review of the inquiry powers that will be available to Inland Revenue staff. We are considering how best to provide a wider unified consultation process to ensure a productive environment for discussing the improvements.

Mr. Frank Field: Would it not be possible to interpret the decision taken in the past week as a fundamental change and a proposal to abolish my right hon. Friend's Department? We are talking about half his budget, and the policy decisions will now be determined in the Treasury.

Mr. Darling: It occurred to me over the weekend that someone would ask such a question, but I had not quite anticipated that it would be my right hon. Friend. With respect, what he says is simply not true. We are talking about ensuring that those who are responsible for the policy and operations of the Contributions Agency should be housed under one roof, as otherwise all sorts of difficulties arise when trying to distinguish between policy and operations.
The Department of Social Security is not being abolished, or anything like it, as my right hon. Friend will appreciate when he reflects on these matters. In any event, it is important that all Departments should work together, and especially the Treasury and the Department of Social Security. Perhaps because of what I used to do, I have absolutely no difficulty with that. Frankly, the departmentalitis that so afflicts Whitehall, and that anyone coming into government is struck by very early on, is something that the Government should strive to break down.
We are talking about ensuring that operational and policy responsibility are under one roof, but of course the Chancellor needs access to Department of Social Security officials, just as I need access to Inland Revenue and Treasury officials. That close working relationship seems to me to be entirely desirable. The public do not ask themselves which Department is operating a policy; they ask themselves what the Government are doing to make life better for them. The Bill is a step change in improving public service, which is why I believe it should be supported.

Mr. Duncan Smith: The Secretary of State started by saying that the Bill was essentially straightforward and small, mainly involving administration, and did not portend anything, but he now seems to have revealed, partly under probing from others and partly from his own inclination, that it is more than that: it is a paving Bill leading to major changes. If he would admit that, we could have the proper debate, about which he has talked endlessly, about means testing and the contributory principle.

Mr. Darling: I repeat that I am more than happy to discuss the contributory principle, means testing and the other ways in which we provide benefits, but the hon. Gentleman must be a subscriber to the conspiracy theory of policy to read into the Bill anything more than sensible administration and the delivery of good government. I know that conspiracy theories are attractive to the extremes of politics, on both left and right, and I am sorry that the hon. Gentleman is falling into that trap.
The Bill is a sensible measure to deliver better administration and a better service to the public. That is why the hon. Gentleman's colleagues in the House of Lords did not oppose it and why the vast majority of people who have studied the measure support it. As he will well know, from time to time all Governments move policy consideration from Department to Department. The right hon. Member for Huntingdon (Mr. Major) used to do it when he was Prime Minister.
The clear principle is that policy and operational matters are often so interlinked that it does not make sense to divide them. Of course policy matters could have remained in my Department for another year, but that would not, I believe, have made for the best administration of the Department. I have no difficulty with the fact that they will be passed to the Inland Revenue. I can still get access to the officials, just as my right hon. Friend the Chancellor can get access to my officials. That is how good government ought to work. Perpetuating needless divisions seems to me to be entirely pointless.
We ought to be discussing measures that deliver a better service to the public. The public do not care which Department deals with the matter; they are bothered about lifting the burdens on business, making it easier to set up a business and making the administration of public life better. That is what the Bill is intended to do.

Dr. Norman A. Godman: Without wanting to appear appallingly sycophantic, may I say that I fully support the Bill? However, I have a question about clause 24. I think that I am right to say that, under the Bill, responsibility for the contributions policy covering Northern Ireland will be transferred at the


same time as equivalent responsibilities for other parts of the country. Clause 24, inter alia, allows the relevant Departments of the Northern Ireland Office to be renamed and restructured. It also allows Northern Ireland civil servants to be transferred to the home civil service. Will my right hon. Friend confirm that civil servants in the Northern Ireland Office's Department of Health and Social Services, and their trade union representatives, are being fully consulted about measures that may cause a sea change in their employment?

Mr. Darling: Yes, the Government consult employees, and there may be changes. My hon. Friend will know that the question of transfer depended to some extent on the progress of other matters. There has been some slippage there, as my right hon. Friend the Secretary of State for Northern Ireland has said. However, it is important in matters such as this that our staff are included in the process. I know that my hon. Friend maintains a close interest in what happens in Northern Ireland and, once the situation is clarified, I shall be happy to write to him and set out what we intend to do.

Miss McIntosh: In reply to the right hon. Member for Birkenhead (Mr. Field), the Secretary of State was rather dismissive about the possibility of his Department disappearing. I am a relatively new Member of the House of Commons, so will he explain what his Department's role will be after the Contributions Agency and responsibility for the working families tax credit have transferred to the Inland Revenue? What will his Department and his Ministers be responsible for then?

Mr. Darling: The hon. Lady may be new to these matters, but she is not that new. She has had time to notice that the Department of Social Security accounts for one third of all Government spending—a total of just under £100 billion, to be precise. I can assure her that we will still have the odd thing to do, and that any talk of the end of the Department is premature.
There was a time when the Conservative party claimed to speak for business. Clearly, that is no longer so. What we are talking about is lifting the burdens on business. The hon. Lady should have a word with the right hon. Member for Horsham, the shadow Chancellor, who knew the importance of doing that. The right hon. Gentleman worked in the City when he took time out from Parliament between the 1992 and 1997 general elections. He was put in charge of the Deregulation Committee: he accepted that the case for change was overwhelming and urged the then Government to stop dithering and to get on with it. Well might he have done so: it has taken a new Government to do something about it.
I repeat—although it may be to the point of tedium—that the public do not care which Department delivers a service, provided that it is delivered efficiently and effectively. That is what we are doing.
Conservative Members have developed a new-found interest in the means test, as befits members of a party that in government doubled the incidence of means testing from 16 per cent. of cases to 34 per cent. The Bill makes no changes to the structure and rates of national insurance contributions. It keeps the scheme distinct from general taxation. The national insurance fund continues to exist separately from the Consolidated Fund.
Moreover, the Bill does not affect the yield from tax or national insurance contributions, nor does it affect benefit expenditure. That is a matter for my Department, and it occupies much of our time. It does not affect the qualifying conditions for any contributory benefit, and it makes no change in pensions policy. So the Bill has no implications whatsoever for the contributory principle. I should be delighted to debate that whenever the Opposition—or anyone else—would like, but the Bill does not affect the contributory principle at all.
As I have said, the Inland Revenue already collects 94 per cent. of national insurance contributions. The Bill is about modernising government to provide a better service to business and individuals. That is what makes the Conservative party's opposition to it so extraordinary.

Mr. Edward Leigh: I hope that the Secretary of State can help me on a technical point, which I raise in the presence of the Chairman of the Select Committee on Social Security, the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), who might be interested in the answer. The Secretary of State says that he will have no difficulty with gaining access to Contributions Agency officials, but the members of the Select Committee have been told that we cannot interview Treasury officials or bring them before our Committee, because the Treasury takes the view that it does not want its officials to be summoned to appear before all those other Select Committees. Will the right hon. Gentleman give a commitment on behalf of the Government that, once the agency has passed from one Department to another, the Social Security Committee will be able to question Contributions Agency officials, despite the fact that they are employed by the Treasury?

Mr. Darling: As the hon. Gentleman knows, I cannot give that commitment. Generally speaking, Select Committees shadow their Department. When I was Chief Secretary to the Treasury, I received warm invitations to address almost every Select Committee, but I was forced to decline those invitations because it was not possible to appear before every single one. I understand the hon. Gentleman's point and I have discussed the matter with the Social Security Committee, because, increasingly, work that historically was confined to the DSS now spans other Departments. I have made the point before that welfare is not only about the DSS, but about changing the whole culture of government. If the Social Security Committee is having special difficulties, there are channels available to be explored. I know that other Select Committees have, from time to time, been tempted to wander outside what might be considered their traditional territory. The matter is not one that I can deal with today, but I am aware of the concerns.
As the subject appears to have been raised in the reasoned amendment—it is not altogether clear—I shall say a word or two about the national insurance recording system computer. Hon. Members on both sides have, rightly, expressed concern about the effect of the difficulties. When we last discussed the subject, last week or the week before, I said that we would put into the public domain further information about the national insurance computer; that continues to be my intention. I hope to be able to do that either this week or at the beginning of next week, so that the House can be brought fully up to date on the problems that we are encountering.
It will take considerable time for the problems to be cleared up. Teams of people are working in Newcastle with Andersen Consulting, which supplied the computer equipment, and with Contributions Agency staff. They are working night and day and my hon. Friend the Minister of State receives daily reports. At this stage, I can say only that it will take time to clear up the problems, but that we are determined to get the system running properly as soon as possible. As I said, I hope to be in a position to give an up-to-date report, if not later this week, then at the beginning of next week, but if any hon. Member has a individual question, my colleagues and I shall be happy to help.

Mr. Duncan Smith: I am sure the House appreciates what the Secretary of State says, but will he consider creating the opportunity for questions to be asked across the Floor of the House by presenting a statement, either when the report is produced or immediately thereafter?

Mr. Darling: It is in the nature of the computer—indeed, of any computer, large or small—that the situation appears to change from week to week, sometimes from day to day. I am not sure whether Madam Speaker would allow me to come to the House to make a daily report on what happened in Newcastle the previous night, so I cannot undertake to make a statement. However, I shall ensure that—as is often true of answers to parliamentary questions—the answer, when it comes, is very long and sets out the position as clearly as possible. If the occasion demands it, it is always open to Opposition to ensure through the usual channels that I make a statement or find some other way to allow questions to be put to me on the matter. I would have no difficulty with doing that.
The contract was entered into in 1995, but there have been difficulties with the system under both the previous Government and the current Government. It must be the objective of all of us to get the matter cleared up as quickly as possible, so I am more than happy to answer questions about it.
The case for transfer is overwhelming. It is good news for employers and for individuals. It will bring about better government by delivering a single Department to deal with tax and national insurance questions. It will enable the best efforts of both the Contributions Agency and the Inland Revenue to be combined to provide better customer service. The Bill paves the way for better government, for the better delivery of tax and national insurance systems and for better service to employers. On that basis, I commend the Bill to the House.

5 pm

Mr. Iain Duncan Smith: I beg to move, To leave out from "That" to the end of the Question, and to add instead thereof:
this House declines to give the Social Security Contributions (Transfer of Functions, etc.) Bill [Lords] a Second Reading because the effect of the Bill will be to facilitate the ending of the contributory principle, leading to the wider application of the means test, which will have a detrimental effect on the public and particularly pensioners; and because the major practical difficulties in transferring functions relating to social security contributions to the Treasury have not been overcome.
Today's debate will be seen by many as purely technical—in fact, the Secretary of State opened the debate on that basis. However, Opposition Members

believe that the legislation is more than simply technical and that some elements of principle must be addressed. Although I accept that the Bill, in all its detail, is very functional, exploring that detail will require a strong and concerted effort in Committee. It is, however, a hugely important Bill, not purely a technical one, and it is a significant part of the Government's legislative programme because it deals with those matters of principle of which the House is aware.
I noted that the Secretary of State began by exploring the narrow, technical side of the Bill and then drifted into the what-ifs. In essence, he was asking, "Once this is done, where do we go from here?" The right hon. Member for Birkenhead (Mr. Field) also teased out that question with the Secretary of State, and I shall deal with some of the bigger issues later in the debate. Notwithstanding the fact that the Bill is detailed, I think that we must address some serious questions of principle. At the end of the day, it boils down to whether one believes the Government's assurances—and we shall come to that point in due course.
I shall begin with some of the misgivings that were raised in the other place by noble Lords on all sides. Let us deal with the Government's assertions about savings to business. Much has been made of the cost to business generated by dealing with national insurance contributions. The Government contend—with the support of many business leaders—that the Bill will save businesses money. The 1994 White Paper, "Competitiveness: helping business to win", contained proposals to examine
how the work of the Inland Revenue, Customs and Excise and Contributions Agency can best be co-ordinated to minimise costs on business arising from tax collection and compliance.
Following consultation on that basis, an amalgamation was ruled out—although closer co-operation was encouraged to reduce the general burdens. In 1995, my right hon. Friend the Member for North-West Hampshire (Sir G. Young) said:
It was concluded that the overlap between the Revenue and the agency did not warrant an amalgamation of the two businesses. In addition, any efficiency gains would be outweighed by transitional costs and disruption to both departments."—[Official Report, 14 June 1995; Vol. 261, c. 516.]

Mr. Geraint Davies: rose—

Mr. Duncan Smith: I will make this point and then give way. I accept—as would any hon. Member—that there will be some administrative savings to business.

Mr. Davies: rose—

Mr. Duncan Smith: The hon. Gentleman must be patient. We have plenty of time—judging by the number of hon. Members who wish to speak in the debate, it is not as though we are under a great time pressure. I will give way to the hon. Gentleman when I have finished making this point.
We accept that there should be some administrative savings. If those savings are to be realised, the real purpose of the transfer must be to cut the overall cost of the Inland Revenue or the Contributions Agency or both. If there is no cost reduction, businesses will continue to carry an increasing burden, which will be reflected in the cost of employing those who work for them.

Mr. Davies: On reflection, will the hon. Gentleman accept that he has completely missed the point?


The savings to business are not savings to the Government in terms of amalgamation. The net present value of savings to the Government is positive—the analysis was not conducted properly. My main point is that there is no quantification of the savings to business, which are enormous and on-going and affect the competitive position of businesses across Britain.

Mr. Duncan Smith: I am coming to that. My point is that, in reality, we must question to what degree those savings will flow to business. What businesses think they will get is quite important, as is what they actually get.

Mr. Davies: rose—

Mr. Duncan Smith: The hon. Gentleman must allow me to finish developing my argument and then he can decide whether I have made my point—I dare say he will decide that I have not and I shall take another intervention from him at a later stage.
It goes without saying that, although the Government headline the transfer as a saving to business, that is debatable, given the nature of the proposal and the increasing costs to business. Businesses will be likely to secure serious and general real-term savings—this point is important to businesses, so the hon. Gentleman must bear it in mind—only by cutting overall administrative costs. That is, ultimately, about the number of personnel that businesses employ and the way in which they do business.
The only way in which the Government could achieve their aim—this is the subject of the extended debate on which the Liberal Democrats are very keen—would be ultimately to merge the two systems. That is the holy grail that would deliver huge savings that could be transferred to business through overall tax reductions. The question is how far the Government intend to go—and, whether or not they want to admit it, that is the subject of the debate.
It is worth making the practical point that the Bill will transfer the Contributions Agency at a time when the Inland Revenue faces serious challenges. The Inland Revenue has already experienced administrative problems with the introduction of self-assessment. The Secretary of State was the Chief Secretary to the Treasury in his previous life, although the less said about reincarnation, the better. He will recall that in a written answer on 28 January, the Paymaster General said, in reference to the problems of self-assessment, that of 3.4 million tax statements issued by the Inland Revenue, 870,000 contained superfluous information that it was accepted was likely to lead to failed tax returns by many people who had been misled.
The Inland Revenue has had to undertake to write to all those taxpayers to apologise for misleading them. That is all linked to the complications of self-assessment. I understand that the cost of those letters alone could be £250,000. My practical point, therefore, is that the Government are proposing hastily to transfer the agency when the Inland Revenue faces major structural upheavals in trying to cope with self-assessment.
Furthermore, costs will ultimately fall on the shoulders of business through the working families tax credit. There is no question but that the change to that structure and the

transfer of that responsibility will place yet more heavy bureaucratic pressures on the Inland Revenue. In Social Security questions today, the Secretary of State referred to the report of the Select Committee on Social Security on family credit. He referred, rightly, to the desire to ensure that the mistakes that allowed fraud to be committed in the claiming of family credit would not be repeated with the working families tax credit.
There is a need to address those major changes, which are all happening at the same time as the transfer of the working families tax credit, the problems with self-assessment faced by the Inland Revenue and the Bill. They are likely to lead to greater cost pressures, which will fall on business.

Mr. Darling: Does the hon. Gentleman accept that one of the ways in which error can creep into the system—I put it no more strongly than that—is if two organisations ask an employer to provide information? The information given to the second organisation may differ slightly from that given to the first because the employer will forget something or say, "I told the other fellow all about that." Mistakes arise when local authorities collect information on housing benefit and so does the Benefits Agency. Is it not better and more efficient for people to deal with one agency that can check that all its information and the national insurance contributions are correct?

Mr. Duncan Smith: The Secretary of State makes a particular point about simplifying the flow of information for business. If it is possible to achieve that aim—that is the question—improved efficiency might result.
My question relates to the way in which the information is gathered and for what purpose. The Secretary of State knows as well as I do that matters are not as simple as they appear to be because two agencies will be gathering and holding information for very different purposes. It is too simplistic to say that it would be good if agencies collected information at the same time because, to a greater or lesser extent, they are collecting different information. I shall return to that point in a moment.
Much of the debate about savings to business is questionable. I used to run a business before I entered the House. Any business would agree to a proposal that saved it a task and therefore represented a saving, but the question is, what is the other side of that equation which may lead to other costs flowing through to businesses? They will not consider those costs because they are not their responsibility. That is what the debate is really about, not just the superficial costs.
In the other place, Baroness Hollis admitted that, over a couple of years, costs are likely to rise by £16 million or £17 million. I do not have the exact figures; I shall have to take Baroness Hollis at her word. Regardless of whether she said that, I would have estimated that there would be a problem because bureaucratic necessities will increase costs. The problem is, who bears that cost? It is not a free-as-air cost; ultimately it must be borne by the taxpayer. That is my point. The Government need to be talking about real savings.

Mr. Geraint Davies: I have just noticed, while reading about the hon. Gentleman's background, that he has no experience of setting up small businesses. He worked for very large companies. I moved from working for a


multinational to setting up my own successful businesses, so I know the time that separate national insurance and pay-as-you-earn systems take. Such separate systems cost businesses because accountants have to be employed to work it out. If the Government are pursuing an amalgamated, aligned and simple system, it will result in a great saving to new small businesses, and be the engine of future employment.

Mr. Duncan Smith: I note the hon. Gentleman's advertisement for his own background, although he should have checked a little more about mine. If he had, he would have seen that the company that I was talking about is a small-to-medium-sized business, not a large business. Its turnover was not what the hon. Gentleman thinks. Most people make that mistake about Jane's. I did quite a lot in that company, but I do not want to get down to the details. That is not the debate. He makes a petty point, which I take, but I do not agree with it.
The Government face a problem of trying to figure out the savings and present them to business. It is very easy to present a superficial case, saying to business, "We will take this away from you, therefore it is a cost saving." The question is whether that is really so. On one hand, the Government are talking up the savings, but on the other, they are admitting that, even in the immediate future, there will be no savings, and, more particularly, given the disruption in the two departments, there are likely to be some increases in cost.
Businesses love to hear wonderful news about savings, but it comes ill from a Government who have significantly raised business costs. That is why I am sceptical, and why one or two businesses are beginning to question the proposals. The Government imposed the windfall tax, which cost business £5.2 billion. Independent assessors estimated that the July 1997 Budget cost business indirectly and directly £14.2 billion. The March 1998 Budget cost business £4.9 billion. It is independently estimated that the minimum wage will cost £8.1 billion. The working time directive is likely to cost almost £7 billion. The European works council will cost £0.085 billion, and this parental leave stuff will cost business £0.11 billion. Overall—admittedly it was not all imposed by the Department of Social Security—business must take into consideration a cost of £39.3 billion.
Even the CBI, which supports the measure because of the hypothetical cost saving, has some reservations. It wonders whether savings really will filter down to businesses, or instead be lost in a swamp of extra costs.

The Minister of State, Department of Social Security (Mr. Stephen Timms): The CBI does indeed support the measure. Has the hon. Gentleman discussed his argument with the shadow Chancellor? Has he read the deregulation task force report, for which the shadow Chancellor was responsible? It says:
It is a massive and unnecessary burden for employers to have to cope with two separate bureaucracies for matters concerning payroll taxes"?

Mr. Duncan Smith: I have endless discussions with my right hon. Friend the shadow Chancellor, who is both a friend and a colleague. He will demonstrate clearly that what the Government propose will not work. I know that it is always great fun in this place to try to point out supposed divisions between people; many in the House

try to do so. In answer to the hon. Gentleman's question, I said that my right hon. Friend the Member for North-West Hampshire dealt with that in 1995. My right hon. Friend the shadow Chancellor has accepted—as we all do—that there are serious obstacles in the way of the Government's intention. We probed that issue in the House of Lords, but did not get satisfactory answers.

Ms Gisela Stuart: Will the hon. Gentleman give way?

Mr. Duncan Smith: No; I want to make progress.
The Secretary of State discussed the problems of the national insurance computer, and I am grateful for his comments. It is worth mentioning the problems that have affected that computer, but what effect do they have on the Bill? Although the right hon. Gentleman did mention the subject, he did not discuss to what extent problems with the computer may cause problems for the Government in the transfer.
In the other place, my noble Friend Lord Higgins raised the matter with the Government several times, urging them to accept that, unless the problem was resolved before the move across, there could be serious problems. The matter was again discussed on Report when, although not admitting that the computer problems would have any effect, the Government conceded that, in the interim, they would have to do something that they had not anticipated. They have now agreed to make interim payments, which I believe is a result of my noble Friend's persistent pressure. That is to be welcomed, but it shows that the situation with the computer is bound to have some effect on the transfer or on the attitude of members of the public to the transfer, who will want to know what is happening.
It is surely not good enough for the Government simply to say that, because they are making a block transfer, it does not matter whether the problems of NIRS2 are in the hands of the Department for Social Security or of the Inland Revenue. That shows some complacency—the Secretary of State did not really answer that accusation. It also shows a failure to recognise that very many pensioners are now aware what is going on and will be deeply worried lest the issue is not resolved.
I therefore ask the Government to think again about timing, even if they are set on other aspects of the transfer. I urge them—if, as expected, the vote goes their way tonight—to consider accepting the amendment tabled by Lord Higgins in the other place, which would delay the transfer until the matter is resolved. I urge the Government at least to consider that and to admit that there will be problems.
The next point that I want to make concerns confidentiality. As we know, the Inland Revenue keeps relatively short-term records on the tax paid by individuals, whereas—as the Secretary of State will know from his previous position of Chief Secretary—the records of the Contributions Agency are cumulative and, of necessity, much more detailed. It is fairly common knowledge that the Contributions Agency is responsible for maintaining the national insurance accounts for more than 65 million customers, 1.4 million employers, more than 3 million self-employed people and a personal pension population in excess of 5.7 million.
I always have an instinctive political concern when someone suggests that administrative amalgamations and transfers make common sense simply because they save money, without examining to what extent the privacy of the individual may be trespassed on. I am fully aware now, as is everyone in the House, that Governments must achieve a balance between their responsibility to the taxpayer and their responsibility to the rights and liberties of those whom they govern. That awareness lies at the heart of this concern.
Reading the House of Lords Hansard, I felt, notwithstanding the soothing words of Baroness Hollis, that that issue was not really dealt with properly. For example, clause 6 of the Bill allows information to be held by the Board of Inland Revenue to be supplied to
any … person providing … services to the Board".
Such an open-ended statement makes us question whether a subsection could be used to justify accessing information that is neither relevant nor necessary to the workings of the Inland Revenue. The Government are unable to give a target for savings—which they seemed to suggest that they would be able to do, and which would of course be the plus for taxpayers. In fact, it appears that the opposite is the case, as Baroness Hollis has said. The balance therefore seems to be pretty much all one way. The Government need to reconsider, in light of the concerns raised in the other place about this matter, the concerns that taxpayers may have about transfers of data. They would contend that the transfer of some data is necessary, but there is unease about the unnecessary transfer of data which may fall into the wrong hands.
That brings me to my final, and main, point. I believe that, in this case, the contributory principle is being eroded. The Government say that that is not the case, but I want to press them on that slightly. Several times I have heard the Government, in the other place and this place, seeking to reassure everyone that the transfer and the amalgamation have nothing to do with the ending of the contributory principle. The Secretary of State made great play about that in the early part of his speech. Yet there were a number of cases when Baroness Hollis stopped short of any undertakings to the contrary or when it could be seen by her words that such a process was a possibility. Today, the Government, in the body of the Secretary of State, seemed also to indicate that, which I think that the right hon. Member for Birkenhead teased out.
For example, on Second Reading in another place the noble Baroness said that the Bill would not end the contributory principle. She went on to say:
This Bill is not the vehicle for major alignment of tax and national insurance contributions. We want to work through that in consultation with representative bodies.
The Secretary of State made roughly the same point this afternoon. He talked about what comes next. I thought that he indicated that there were possibilities that the Government would move towards the erosion, if not the ending, of the contributory principle.
I think that that shows clearly that there are other motives. I wish that the Government were clear about these matters. I believe that they are clearly of a mind to do exactly that to which we have been referring. That would be a wrong move—and it is not only the

Opposition who take that view. In a recent qualitative study of perceptions of the national insurance system, Bruce Stafford, the author, found that
although the respondents lacked detailed knowledge of the benefit system, in their responses they were strongly committed to the contributory principle.
So there is concern outside the House. The public find that what they feel strongly about is, without any serious or detailed debate, slowing being eroded, and that under the Bill that process could certainly be accelerated.

Mr. Geraint Davies: Will the hon. Gentleman give way?

Mr. Duncan Smith: No. I have given way to the hon. Gentleman a number of times.
There are some who openly wish to end the contributory principle, and say so. I note the Liberal Democrats on this point, which they take to its logical conclusion. I note also that in the other place Lord Goodhart said:
All this emphasises both the logic and convenience of treating NICs as a tax."—[Official Report, House of Lords, 10 December 1998; Vol. 595, c. 1043–48.]
I think that the Liberal Democrats would accept that.
The point of our opposing the Bill is the failure of the Government to be clear. Perhaps the Liberal Democrats are clear, but the Government are either unclear or, in reality, do not want to say what the purpose of the Bill is all about. The Government are moving quite clearly in the direction I have described. Everything hinges simply on whether they are to be believed.
Ultimately, the entire debate comes down to that. The Government say, "Trust us. We shall reassure you all by telling you what this is. We are not going to do what you say." I look at the Government's assurances and at what the Government have done since they came into office on means-testing—child benefit for 16 to 18-year-olds; widows benefit, a change to bereavement benefit, minimum pension guarantee, extended means-testing with the WFTC, incapacity benefit, winter fuel payments and tuition fees. Each of these benefits is clearly an extension of means-testing or a use of the means-testing device.
The Government have set their entire policy so that it focuses, as they say, on the bottom 10 per cent. I argue that the greater the level of means-testing, the more that that approach will act against many of those in the bottom 10 per cent. and against saving generally. That is contrary to the Government's wish. For example, with the Government's minimum pensions guarantee they will face the problem of having built a disincentive to saving for anyone below average earnings. The right hon. Member for Birkenhead has been on record many times—I make no apology for quoting him—saying that means-testing penalises honesty, discourages work and harms thrift.
The question is not whether the previous Government increased means-testing—[Interruption.] I do not deny that. My point is whether it is right to continue down that road. Will what the Government are doing deliver what they claim, which is a focus on the bottom 10 per cent., without seriously damaging those who are on marginal


and low incomes who would attempt to save? They will find themselves either driven to dishonesty or to making no savings, so that they fall within the bottom 10 per cent.

Mr. Darling: In what respect are the winter fuel payments means-tested?

Mr. Duncan Smith: The right hon. Gentleman knows very well that a part of the winter fuel payments is dependent on income support. The right hon. Gentleman should check that himself.
In essence, we do not believe that the Government have in any way made their case for the transfer. We do not believe that the assurances given are sufficient. We believe that, ultimately, the Government are en route to wind the basic state pension into some overall minimum income guarantee. The Bill is part of that process. If the Secretary of State disagrees with that, will he now come to the Dispatch Box and say categorically that there is no way in which the Government would seek to means test the basic state pension after the next election? Will he tell us that there is no reality in the idea that the Government will end up reducing the contributory principle and abolishing it? I believe that the Government have a clear idea of where they are going.

Mr. Darling: The Green Paper on pensions clearly states that the basic state pension will remain universal and will not be means-tested. What is more, if the hon. Gentleman finds the time to read the Green Paper, he will see that it is very firmly rooted in the contributory principle.

Mr. Duncan Smith: The right hon. Gentleman cannot get away with that. The reality is that the Government have failed to commit themselves never to means-test the basic state pension or to wind it into any basic means-tested income. It is sophistry on the Government's part—smoke and mirrors.

Mr. Chris Pond: rose—

Mr. Duncan Smith: No, I am finishing.
The Government have today set themselves on a course that will ultimately get rid of the contributory principle and end up with a means-tested focus on the bottom 10 per cent. There is no way that we can agree to that or trust them. It is a hidden measure, which will come about directly as a result of Government policy.

Mr. Frank Field: I shall make only two points. The first relates to the significance, as I see it, of what the Secretary of State said about the conclusion that he had reached during the past week. In the other place, the Bill was debated as one that changed the administration and moved to the Treasury the offices responsible for administering the national insurance side. The Secretary of State told us that in the past week he had concluded that policy should be transferred as well.
When the Department of Social Security first learned of the Treasury's wish for such a transfer, there was deep unease. Unease about the Treasury's intentions was not limited to the DSS. We thought that, by the separation of administration from policy, the Department would be kept

intact. The Secretary of State made light of my intervention, when I said that in effect a large part of his Department was being given away. He said that he expected someone to comment on that, but he did not expect it to be me.
When the Bill is enacted and the Secretary of State's intentions are realised, who will answer questions on the matter? I do not doubt that most people out there will still think that the DSS is paying their pension, but in this place and before Select Committees, Treasury officials will answer for the running of the national insurance scheme.
We know that the national insurance scheme accounts for 40 per cent. of the Budget. It represents a major change for the Department to lose not just day-to-day running but policy making in that area.

Mr. Webb: On a point of clarification, as I am not sure whether I understood what the Secretary of State said, does the right hon. Gentleman understand that responsibility not only for national insurance contributions but for national insurance benefits is to go to the Treasury, or will only the contributions side be transferred, leaving the Secretary of State still responsible for the benefits side?

Mr. Field: As I understand it, the contributions side will be transferred—what people are paying, when and how. That is the most crucial aspect. I do not for a moment deny that the Department will be given the job of running the benefits as an outpost, but policy decisions about who gets what, when and how—the essence of politics as we understand it in this country—will disappear from the Department.
That links up with my second point. I do not believe that all members of the Government fully comprehend the value that the country attaches to the contributory principle. Indeed, it is clear from the statements that he has made that the Chancellor does not.
Following the Budget in which the Chancellor declared his intention to make the move that has already been referred to, he went on television after making his statement, as is customary. He talked about the national insurance tax. I thought that that gave away most of the game, for, although he might think of the measure as a tax, most people out there in the country think of it as anything but.
We, as grand politicians, may think that the ordinary voters are hit with folly if they think of contributions as different from tax, but, as the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) said, the studies provide evidence that people think that, although they have to pay, they are earning something as well. The importance of that is that Labour Members are probably keener than Conservative Members—we must make exceptions for the Liberal Democrats here—to raise taxation to cover public services.
If 40 per cent. of the Department of Social Security budget is thought of not as taxation but as contributions, and the earning of benefits in the way that my right hon. Friend the Secretary of State explained at the start of his speech, and if we are lightly to dismantle that and teach people their folly—this is nothing to do with contributions and all to do with tax—Labour Members will have even greater difficulty raising the necessary revenue to ensure that we can provide the public services that we want.
About £40 billion is raised from individuals towards their national insurance benefits. They do not think of that as tax, but as separate from tax, so it is extreme folly to be considering going down a route that will drive it into people's minds that they are paying a tax.
One of my concerns is that the move is not isolated. The Chancellor said in the Budget that he would align tax and national insurance thresholds, so there will be a particular point at which people move over: the lowest rate of tax will come into play and full national insurance contributions will be levied as well.
At the moment, most people can see the difference between what is paid in tax and in national insurance, and therefore understand perfectly what the Chancellor is about in trying to establish a starting rate of tax of 10p in the pound, but they will be mightily confused when the same machinery and the same pay-as-you-earn slips tell them that the rate of tax is not 10p because, on top of that, they will be paying a lop national insurance tax.
My right hon. Friend the Chancellor is absolutely right to believe that we need to get the starting rate of tax down, and right to take on people who criticised him, before they were elected to the House, for not going down the allowances path. Nobody worries about what the tax allowances are. People do not tumble into constituency surgeries to say that they have decided not to work overtime, or not to take a new job, because the allowances will not permit that. They all talk about their marginal rate of tax.
My right hon. Friend is also absolutely right to say that, if we are trying to ensure that people at the bottom are valued properly, and that there are real rewards in the system for them, they should have a low rate of tax. The right hand of the Chancellor is used for that, but his left hand is used to tidy up the operation—how much more simple it would be if the whole system were combined—and in his Budget broadcast he called it a national insurance tax.
My worry about that approach is that, if the Chancellor ever manages to convince the electorate of what he is about, he will never achieve an incredibly important objective for this Government—a clear starting rate of tax of 10p in the pound. If he attempts to sew together these functions and combine them, saying, "Isn't that easy for business?"—never mind whether the service is better and never mind what service is provided, so long as we can say that it is better—we will all chant in unison on that point. However, people will quickly see that the national insurance contribution is not a contribution, but a tax and part of the tax system. I am worried, as are other hon. Members, that, when we get to that stage, we will dismantle national insurance rights.

Mr. Geraint Davies: Does my right hon. Friend accept that there is counter-evidence regarding the trend towards amalgamation of all taxes into one tax, including moves to hypothecate revenues from road pricing for public transport? There is no contradiction between amalgamation of the administration and realignment for labour market efficiency and the ring-fencing of national insurance contributions and benefits.

Mr. Field: There would not be, except that that is the present system. A hypothecated contribution from

taxpayers as their national insurance contributions will be rolled up into a revenue operation. It will be more difficult for us to ensure that there is no contradiction in future.
It is right that no Chancellor can allow the whole of the Budget to be hypothecated, because some areas are crucial to civilised life in a modern state. Many of us would not want taxes to be divided up and hypothecated. On this, as on so many issues, balance is important. Given that there is real resistance to rising tax rates, and that we won the election only because we had the Prime Minister as our leader and gave the most clear statement that we would not raise direct taxation, we are now embarking on an extraordinary policy.

Mr. Jim Cousins: As my right hon. Friend knows, I, like him, defend the contributory principle and the rights that go with contributions. Does he concede that nothing in the Bill challenges the concept or the identity of the national insurance fund? Other Government policies, such as the working families tax credit, the proposals on national insurance contributions and the proposal for a state second pension, give a clear commitment to establishing eligibilities and entitlements even if no contribution has been made. That separation of the need to make contributions and the establishment of eligibility and entitlements is not a withdrawal of the commitment to the national insurance contributory principle, but rather a huge and ingenious extension of it.

Mr. Field: Gosh, I wish I shared my hon. Friend's views. I might have thought that I was wrong even to speak in the debate if he had not mentioned the state second pension. It is clear from what those on the Treasury Bench say that, with the rebates, they expect most people earning more than £9,000 a year to be in private schemes. The people who remain will not pay contributions up front into the type of scheme that I want, with contributions raised so that they are equal citizens. There will be a mean-tested element.

Mr. Cousins: I hope that my right hon. Friend will take account of some of the points I made, but I should like to pursue a further point. The state second pension, which credits everyone with an entitlement to £9,000 a year in terms of the value of contributions—whether or not that £9,000 a year has been earned—is an important extension of the national insurance contributory principle.

Mr. Field: The operative word in my hon. Friend's intervention is "credits". We all know perfectly well that, sadly, credits are different from contributions. The Government have not introduced a scheme whereby contributions will give equal citizenship to those who are at the bottom of the pile as compared with other people.
If we consider this measure with blinkers on—like one of those cart horses in old-fashioned pictures of the labour movement—my hon. Friend is right to say that nothing in the Bill leads to the scenario that I am describing. When we have passed the Bill, however—if we pass it—we will have started a momentum. How can the next stage logically be resisted, once we have agreed to the transfer of power for which the Bill provides?
We are not debating a mere tidying-up operation; we are not debating simply the moving of furniture between Departments. We are discussing a much more


fundamental issue. Authority is to be transferred from one Department to another. Although my right hon. Friend the Secretary of State is right to say that we should not defend traditional departmental divisions just for the sake of it, there are reasons why we have different Departments, and why the Treasury does not run everything: the existence of different Departments means that differences in status, views and values can be brought to debate. In this instance, a whole area of policy is being given to the Treasury.
A second question also concerns me. Does the Chancellor really see how his left hand will operate in relation to his right? When the Chancellor was an Opposition Member and most Opposition Members attacked his views on the starting rate of tax, I defended it, on the basis of the effect that it would have on the way in which people operated when the only opportunities were low pay and the chance to build on it with overtime. I do not believe, however, that the Chancellor has clearly thought out his idea of a national insurance tax. He will never be able to achieve that starting rate of tax if he conveys to the public that there will also be a 10p starting rate for national insurance. People are not that silly: most can add 10 and 10, and will know that the new starting rate of tax is 20 per cent.

Mr. David Rendel: The Liberal Democrats welcome the Bill, as we did when it was in the House of Lords. We welcome it for a number of reasons, but I welcome it particularly because it gives me an opportunity to show constructive opposition in action.
It is, I think, well known that the welfare reform Bill will come to the House shortly. In my party, it has become known as the benefit cuts Bill, and I think the Government will find that we are unable to support the benefit cuts that they propose. We are therefore glad of the chance to demonstrate this evening that, when we agree with the Government we will vote with them, just as we will vote against them when we have fundamental differences with them. Incidentally, it is splendid to find that today we are in line not only with the Government, but with the right hon. Member for Horsham (Mr. Maude).
The Government are right to consider the long term. Here I take issue with the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith). All too often, the House considers only what will happen over the next few years, and what will happen until the next election. In this instance, the Government have shown that they are prepared to live with short-term costs in return for longer-term savings. I wish that they, and indeed the last Government, had done that more frequently.
We support part I of the Bill—again, for a number of reasons, but perhaps for one reason in particular. As several hon. Members have pointed out, in practice national insurance contributions already have all the characteristics of a hypothecated tax rather than an insurance premium system. Those characteristics include the fact that the amount of benefit payable does not depend on the amount of contributions made during an individual's earning lifetime.
Secondly, we know that a large part of the payments—as has been said, about 75 per cent.—are for pensions. Unlike insurance payments, these payments are made on a "pay as you go" basis. Thirdly, national insurance

contributions are already collected alongside direct taxes in the PAYE system. If they are already collected as a tax, it is logical for them to be administered alongside income tax, in a single system. Fourthly, as several of us know to our cost—those of us, for example, who expect pensions dependent on the state earnings-related pensions scheme—the pay-out that results from national insurance contributions during an earning lifetime can all too easily be changed by a Government's later actions. That has happened several times, most recently, sadly, with the cuts in widows benefits—due to be introduced under the welfare reform Bill. People who have made contributions over several years thinking that, if they died, their widows would receive a certain level of payments, are now seeing that those payments will not be anything like as large as they had hoped. The Government expect to make about £500 million-worth of annual savings there.
Under the previous Government, various changes were made to the SERPS regulations, so that the entitlement that people were expecting originally as a result of payments through SERPS is not what they can expect now. In particular, we know that, as a result of a change under the previous Government several years ago, those who become widows shortly after 1 April 2000 will receive a lot less than those whose husbands die just before that date.
Perhaps most important was the abolition of the pensions link to earnings. At that point, those who had expected larger pensions as a result of their national insurance contributions found that they were living in cloud cuckoo land: their pensions would be much smaller than they had previously expected.
Therefore, Governments can make major and significant changes to people's expectations even after their contributions have been made. That means that, in practice, those contributions are much more of a tax than an insurance premium.

Mr. Cousins: Does the hon. Gentleman think that his point, which is to defend the future entitlements to benefits of contributors, would really be improved and strengthened if, as seems to be the policy of his party, national insurance were regarded purely as a tax, and the national insurance fund and actuarial defence of the fund were done away with, which the Bill significantly does not do?

Mr. Rendel: I think the hon. Gentleman has entirely misunderstood my point. I was saying that it is already true that the contributions do not give people a definite pay-out afterwards; I was not saying that it should be true that they do. That in itself proves that the national insurance contributions that we pay now are already, in effect, more of a tax than an insurance premium.
There is another reason why part I is particularly worth supporting. It involves exactly the opposite argument to the one advanced by the right hon. Member for Birkenhead (Mr. Field). It is welcome that people in our communities should recognise the fact that national insurance is already a form of tax. We are misleading them. It is a con trick to pretend to people that, by paying national insurance contributions, they are not, in practice, being taxed.
I entirely agree that, if we con enough of the people enough of the time, it may be slightly easier to raise money out of them and then spend it in ways that we feel


are appropriate, but that is not an entirely honest way in which to do things. It is important that we in this place should be open, honest and properly accountable for what we do, and that we do not try to mislead people into thinking that they are paying something which, actually, they are not paying.

Mr. Field: I am amazed by the hon. Gentleman's argument. He rightly gives such emphasis to the Liberal Democrats' involvement locally to reflect what people think. I am not advocating that we have a national policy of deceit. All I am asking is whether it is not a useful starting point that most people regard national insurance as different from taxation. Given the resistance to financing the policies that the hon. Gentleman's party would like to have and that the Government wish to continue to promote during the current Parliament, what is the point of trying to knock the fact into people's head and say, "How foolish of you to think of national insurance as a contribution towards your benefits; it is, in fact, merely a tax"?
There is a major difference in people's minds. Taxation is that huge area of money that they lose and over which they do not have a direct say, whereas, with national insurance contributions, for all the worries that we have about Government actions on cutting benefits, people still feel that, in the main, they are well served by that fund.

Mr. Rendel: I should not for one moment accuse the right hon. Gentleman of seeking to deceive people. I suggest that he is saying that people have been deceived, and that we should allow them to remain deceived. I believe, conversely, that we should ensure that people are no longer deceived but realise the truth of the situation—that, in practice, the two things are very similar.

Mr. Cousins: Will the hon. Gentleman deal with the point made both by me and by my right hon. Friend the Member for Birkenhead (Mr. Field), and clarify whether the Liberal Democrats' policy is to do away entirely with the contributory principle? Is it their policy to do away with the national insurance fund? Is it their policy to do away with the actuarial defence of the national insurance fund?

Mr. Rendel: The national insurance fund has, regardless, occasionally to be topped up by taxation: contributions alone do not fund the system. The defence of national insurance contributions being offered—that they are a form of insurance—has, therefore, long been discredited. Whether Liberal Democrats are in favour of that defence is irrelevant, as it is not available. It is only reasonable, decent and honest to admit that fact and to tell people what has happened.

Mr. Cousins: Will the hon. Gentleman give way?

Mr. Rendel: No; I have already given way quite enough in this debate.
The Tories' reasoned amendment suggests two reasons why the Bill should not be given a Second Reading. The first is that the Bill would
facilitate the ending of the contributory principle".
Although I suppose that they are right to say that, the Bill certainly would not necessitate ending the principle, and it would be wrong for us not to pass the Bill only to raise an artificial barrier to ending the principle.
If the House wished, at some later date, to end the contributory principle, we should have a fair and reasoned debate on whether it would be right to do so. Although there might be differences between the three main parties about whether it would be right to end the principle, we should—for the reasons that have been given, some of which I have enumerated—address the issue at that point, and not erect artificial barriers today by failing to give the Bill a Second Reading.
It was unreasonable for the hon. Member for Chingford and Woodford Green to say that it did not matter that the previous Government were largely responsible for ending any pretence that national insurance contributions are a form of insurance. Every year they were in office, they did so much to destroy the contributory principle and to increase reliance on means testing.
The second part of the Tories' reasoned amendment mentions the "practical difficulties" of transferring functions. The hon. Member for Chingford and Woodford Green was, of course, right in saying that the national insurance recording system 2 has been a disaster, and that it gives us a severe warning about the difficulties of relying on major high-tech projects to deal with some of the problems of government. He was right also in that the Government have been forced to acknowledge the difficulties of NIRS2.
I should like, nevertheless, to congratulate the Government on making no fewer than two U-turns in the past couple of weeks—as I am not one for thinking that making U-turns is a sign of weakness. I am delighted that the Government had the good sense to realise that they made a mistake and consequently to make a U-turn.
The Government's first U-turn was made a couple of weeks ago, after the debate on the contributions uprating, when Ministers were under pressure for refusing to give compensation to the very poorest of those who had been affected by NIRS2. Only a few days later, during the debate on Third Reading in the other place, the Government decided to announce that they would, after all, make a U-turn and provide £10 compensation for all those who had been affected by NIRS2. The U-turn was very welcome, and I congratulate the Government on it.
In the past few days, the Government made another U-turn, on the matter of widows who were asked, under NIRS2, to decide between a widows pension and a retirement pension. In answer to a written question that I tabled to Ministers, we have learnt that widows who were misled by NIRS2 and were unable to choose correctly—so that they might gain the maximum benefit—will be allowed to choose again, after NIRS2 has given them the right information. I congratulate the Government on that U-turn also.
Liberal Democrats support the Bill. As other hon. Members have already said, the provisions in part I have long been Liberal Democrat policy. I understand that part II was based largely on a suggestion made in the other


place by Lord Goodhart, in last year's debate on the Social Security Act 1998. We therefore welcome part II also. Part III deals primarily with a technical matter.
We do not believe that the Tories' reasoned amendment carries any real weight. We believe that it is more than a little hypocritical, and hope that it will be not be supported by the House.

Mr. Jim Cousins: I suppose that I have to declare a sort of interest, as I am one of the hon. Members representing the city of Newcastle, where the Contributions Agency is headquartered. I suppose that I also have a small claim to fame—you will understand, Mr. Deputy Speaker, that any small claim to fame in the House is one that should certainly be pressed—in that the national insurance recording system computer is headquartered in my constituency. However, I should add that, fortunately—as you will also understand, Mr. Deputy Speaker—one represents people, not computer systems.
I support the Bill. However, if there had been any indication that its passage would lead to a major loss of employment in my own city, I should of course not be supporting it. If it proposed any major loss of the administrative functions currently performed by the Contributions Agency, I should not be supporting it. If the Bill posed any threat to the contributory principle—as outlined by the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) and my right hon. Friend the Member for Birkenhead (Mr. Field)—I should not be supporting it.
I firmly believe that it cannot be right for the United Kingdom to have such a multiplicity of revenue collection services, and that it must be right to bring together the major revenue collection services. Amalgamation of the Contributions Agency with the Inland Revenue is long overdue, and I hope that that amalgamation will eventually be followed by amalgamation of Customs and Excise with the Inland Revenue. It cannot be right to have parallel revenue collection systems, which are extremely expensive to mount, all duplicating one another's work and imposing a burden both on taxpayers and on those with whom they have to deal.
It cannot be right to continue parallel revenue collection services especially now that we have been given an example of computer systems development and failure. That failure demonstrates the need for administrative unification of the administration services and information technology that supports revenue collection services.
I seek some assurance from Ministers on information technology. I believe that we should proceed as rapidly as we can in achieving unification of the information technology underpinning revenue collection, contributions and benefits. I hope that the Government are fully committed to eventual unification of the computer systems and data networks of the Contributions Agency, the Benefits Agency and the Inland Revenue; to full implementation of the intentions of the national insurance recording system project; to unification of housing benefit with the Benefits Agency; and, ultimately, to bringing the information handling of all those benefit distribution and revenue collection services into one system.
There are practical issues for Newcastle. As my hon. Friend the Minister knows, there is a major private finance initiative project called Prime, begun under the previous

Government, which will rationalise the Newcastle sites of the Benefits Agency and the Contributions Agency. I should like an assurance that the project will go ahead in its existing form. Only recently a Newcastle estates partnership was formed, to be run by the Contributions Agency, to take forward the management of the PFI estate project on behalf of the Department of Social Security. Where will responsibility for the project lie when the Contributions Agency is transferred to the Inland Revenue? I should like clarification on where the administrative drive and accountability for the Newcastle estates partnership are to be. Is that to remain with the DSS, whose PFI project it is, or will the responsibility for driving that forward to be transferred with the Contributions Agency to the Inland Revenue? Those are important housekeeping issues for the city of Newcastle. I hope that my hon. Friend will be able to clarify them.
I should like to make a plea for a small group of manual workers caught by one consequence of the merger of the Contributions Agency and the Inland Revenue. The Inland Revenue has a policy of not employing people over 60. The Contributions Agency allows people to work after 60 if they can still make a proper contribution to the service. A very small number of workers are caught not knowing what their employment prospects are. I hope that my hon. Friend the Minister will allow the current employment practices of the Contributions Agency to be extended for that small group, many of whom are low-paid manual workers performing routine functions such as security and portering. They should be able to continue their work without their prospects being affected by the administrative change of functions. I hope that the Minister will assure us that the prospects of casual and short-time employees of the Contributions Agency will not be varied because of the transfer to the Inland Revenue.
The Government wisely said that the Contributions Agency, as it then was, would have the policing function for the minimum wage. It would be sensible if the policing function for the working families tax credit were also transferred to what would have been the Contributions Agency. Those important administrative points need to be clarified.
A broader matter has been introduced in the debate that I do not regard as relevant—the future of national insurance contributions. I maintain a full defence of the contributory principle, the principle of national insurance contributions and the eligibilities and entitlements that go with them. The Liberal Democrats' policy, in so far as it has been made clear this evening—which it has not, to a significant extent—is confusing and worrying.

Mr. Leigh: Will the hon. Gentleman confirm from his constituency experience what I know from having visited the Contributions Agency—that, far from the contributory principle being dead, the staff, who are the hon. Gentleman's constituents, make enormous efforts to ensure that people's contributions are worked out to the nearest week? The public believe that they are contributing to their pension, not paying a tax. That is why the contributory principle is important to staff and to the general public.

Mr. Cousins: It grieves me slightly to have to agree with the hon. Gentleman rather than the Liberal Democrats. Without prejudice to wider political issues, I


would instinctively prefer to agree with the Liberal Democrats than with the hon. Gentleman. Sadly, on this occasion I agree with him. The rigour and accuracy with which an enormous number of contribution records have been maintained over generations are among the essential data handling problems that have proved central to the difficulties of NIRS2. The fact that there is a problem is an enormous tribute to this country's historical commitment to national insurance and to the rigour and accuracy with which that information has been maintained by Contributions Agency staff over many years. I am sure that nothing in the Bill puts that at risk. I am sure that Ministers will seek to clarify any such issues that may worry hon. Members.
I should like clarification of one minor issue arising from the exchange between my right hon. Friend the Secretary of State and my right hon. Friend the Member for Birkenhead. I do not regard the transfer of the policy functions of the Contributions Agency as in any way threatening if the functions are those relating to the national insurance contributions system. It would be a possible problem and cause for anxiety if policy for entitlement and eligibility were transferred to the Inland Revenue. It would be helpful to have it on the record that that is not the case. The policy for entitlement and eligibility should clearly remain with the Department of Social Security. On that basis, I am happy to say that I shall cheerfully support the Bill.

Miss Anne McIntosh: I have tried hard to follow the logic of the transfer of functions from the Contributions Agency to the Inland Revenue, but I have failed to grasp the reasons. I support the reasoned amendment. The Secretary of State, who I regret is no longer in his place, failed to make an adequate case, so he will fail to secure my support for a Second Reading.
The Secretary of State challenged me on the basis that the Conservatives had not taken business views sufficiently into account. The proposal to transfer the agency to the Inland Revenue will place a real burden on business, particularly with the computerisation of the programme to adapt the payroll, and will put an increased cost on the employer as the operator of the programme.
I have taken time over the past two days, since we learned that we were to have this debate today, to ring round and speak to some business leaders, including those representing large, medium and small businesses. Business leaders of companies, large and small, recognise that the Bill will place an increased administrative burden on them, particularly smaller employers. The level and sheer variety of contributions set out in schedule 2 are huge, but the Secretary of State did not refer to that. Many contributions are one-off, and not on-going. For example, statutory sick pay and maternity pay are normally for a limited duration, and are paid over weeks or months, not years. Other contribution schemes are on-going, such as personal and occupational pension schemes.
Presumably it will be up to the employer to register the information on contributions with the Inland Revenue and, presumably, information will be transferred to the Inland Revenue. I accept that, at first sight, this may appear to be a simplified procedure, but the Government

are trying to sell the policy as a business-friendly one, and as one that is welcomed by business. That is not the message that I have received—perhaps because I am in opposition, and businesses may wish to share their concerns with an Opposition Back Bencher.
Businesses are extremely concerned that the transfer will impose an administrative burden on them, and they asked the Government to grant them time to prepare adequately for that burden. That point was not taken up by the Secretary of State. He said that the appointed day was just 14 months off—1 April 2000—so I cannot see any evidence that the time for preparation requested by the business community has been worked into the Government's timetable. Perhaps some light will be thrown on that matter in the winding-up speech tonight.
Businesses have expressed concern at the role of the tax inspectors in the process. Perhaps tax inspectors are not the most beloved of all functionaries or officials, but real power is to be concentrated in their hands. It is my understanding that the inspector will have two good reasons to check the books of businesses—first, to investigate the employee's tax contributions under PAYE, and, secondly, to investigate the contributions, entitlements and payments under the schemes listed in schedule 2.
I wonder whether the Government have considered the concerns of business—we have heard no comment. Inland Revenue inspectors will be dealing with the scheme, and that will raise the hackles of the business community. The Government may wish to respond to that point this evening.
Businesses have referred also to their concern at adequately ensuring the confidentiality of their employees' details, which will be available on in-house computers. The current system clearly ensures greater confidentiality and compares favourably with the new approach of transferring the contributions from the Contributions Agency to the Inland Revenue, and transferring responsibility again to the employers. I was mildly surprised that the Secretary of State did not refer to that issue, which was raised in Committee in another place. I wonder whether the Government have taken those concerns on board.
The threat to confidentiality is real and emerges through the pooling of information, as proposed by clause 6 of the Bill, which allows for information being held by the Board to be supplied
to any person providing services to the Board".
What controls will be put in place to make sure that confidentiality will not be breached? I would like some satisfaction on that point, so I can allay the fears of businesses.
Making the Inland Revenue responsible for administering not just tax and the work of the Contributions Agency but the working families tax credit will create a huge bureaucratic burden. Will there be opportunities adequately to question the Treasury Ministers responsible on the Floor of the House and in Select Committees? If not, that raises the question of genuine and adequate democratic control. Which Ministers will be responsible for replying to our concerns on behalf of constituents?
I was slightly surprised that the Secretary of State was dismissive, particularly when he said that the Bill was technical. However, he got into some difficulty when he moved on to broad policy issues. The questions that I have raised deserve answers.
What will happen to those staff who, through the DSS, normally administer the work of the Contributions Agency—most, but not all, of whom are based in the constituency of the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins)? Have the staff been consulted? Will they be required to move, following a merger and a transfer, to the Inland Revenue? Do the Government stand by the statement made by Baroness Hollis in the other place on 10 December last year, that 200 jobs will be lost countrywide—most of them, perhaps, in Newcastle? Is that a conservative estimate? Will more than 200 jobs be lost throughout the country?
I wish to place on record my concern at the extension of means-testing and the move towards ending the contributory system that pervade the Bill. The Government are cutting and manifestly means-testing pensions. The latest example of that is the Government's new bereavement benefit, which is causing great concern to my constituents.

Mr. Leigh: The Secretary of State repeated the commitment on behalf of the Government that there was no intention to means-test the basic state pension. Does my hon. Friend agree that that is a worthless commitment since, by 2050, the basic state pension will be worth only 7 per cent. of average earnings? The Government are therefore ensuring that most pensioners will be in receipt of a pension that bears no relation to what they have put in through taxation or national insurance contributions.

Miss McIntosh: I agree with my hon. Friend.
The Government have asked to be judged on their record. They were elected on a pledge to cut social security expenditure but—by their own admission—the contribution to social security bills throughout the country will go up by £1.5 billion as a result of the working families tax credit. The Government would like to be judged also on their record on pensions. However, they are already means-testing pensions. The latest example is the new bereavement benefit. Widows and widowers with no dependants will have their benefits withdrawn after six months, in spite of contributions having been paid on their behalf by their spouse. The Government have clearly started on the slippery slope towards means-testing, and the Bill expedites the process.
I have not been persuaded by the Government's arguments this evening. They have failed to address the concerns of business and of those who will no longer benefit from the new bereavement benefit after six months. It is clear that the bureaucratic overload on one particular Department, the Treasury, will be extreme. The costs of the transfer wildly outweigh any long-term benefits that the measure will bring. As the right hon. Member for Birkenhead (Mr. Field) said, it is a camouflage. I am persuaded that at the heart of the Bill is a camouflage hiding the introduction of a 10p starting rate for income tax by simply introducing a 10p national insurance starting rate. That would take us back to a 20p starting rate, which sounds terribly familiar. I support the amendment and I oppose Second Reading.

Mr. Geraint Davies: This is another example of Labour acting decisively in the interests of business, the economy and good government, whereas the previous Government, under the auspices of Sir George Young, simply prevaricated and pathetically failed to recognise the—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The hon. Gentleman must remember that if he is referring to another Member of Parliament he should do so in the third person and not by name.

Mr. Davies: Indeed.
The previous Government stumbled on with the somewhat inefficient and duplicatory system and made it worse by bungling over the contract for the new national insurance recording system, NIRS2. The new Government faced a legacy of structural inadequacies that had not been faced up to, alongside impending operational chaos. They took and continue to take a long view, sorting out the operational as well as the structural problems.
The Bill represents a better service for both business and consumers, arising from an amalgamated national insurance and PAYE income tax system. It has been welcomed by the Institute of Chartered Accountants, which says that it should reduce red tape; by the Public Accounts Committee, which says that it represents a significant reduction in the administrative burden on employers; and, generally, by the Confederation of British Industry, the Financial Times and others.
The Bill will make it easier to align national insurance and PAYE. I know that there are some reservations about whether we should do that. Liberal Members have mentioned the report from Bath university in November 1998 and were bullish about how alignment would get rid of structural distortions in the labour market and help employment. Employers are all for it, and I realise that there are some reservations about that, but it is good in principle to have the option available.
The change makes logical sense, because the Inland Revenue already collects 94 per cent. of national insurance contributions. Having two separate agencies seems somewhat daft, as the Inland Revenue is already the collection agency for the Department of Social Security.
The primary case against the change, urged by the Opposition, is that it undermines the contributory principle and is objectionable as part of a trend towards means testing. It is true that the major growth in benefits has been in means testing, but that does not necessarily imply a threat to the contributory principle; it simply reflects the more complicated world in which we live.
National insurance was based on a world in which everyone worked 35 or 40 hours a week for perhaps 40 years; it was not set up to cater for the complexities of part-time work, disability, women in work, a mobile jobs market with shifting careers and the complex needs of targeted benefits. The old contributory method did not cater adequately for those complexities, but that is not to say that it is not of value in itself.
The contributory principle is good for pensions, but means testing and category benefits, such as child benefit, are appropriate for particular groups with


particular circumstances, as they can be adapted to take account of a changing job market and specific needs such as those of families. That is why, since the 1960s and 1970s, the major growth of benefits has been in three major areas: housing benefit and in-work benefits, which are income related, and category benefits such as those reflecting rights for the disabled and others.
There is a misunderstanding in this debate, because although the administration merger is a necessary condition for alignment of national insurance and tax, its introduction does not mean that we need such an such alignment; and even if we have that alignment, that does not mean that we get rid of the contributory principle, as I attempted to say when I mentioned hypothecation and ring fencing. There will be a mixed economy for the delivery of benefits, and that is right and modern and should not be objected to.
The Opposition argued that the previous Government ruled out the merger on the basis of cost, but the present discounted value to the Exchequer is positive: the front-loaded costs of £16 million in the first year and £17 million the next year, moving into positive savings of about £4 million after that, discounted over time, will give a benefit to the Exchequer; and the real benefit that has not been counted is the enormous cost saving to the business community, which will increase competitiveness for the British economy. There is an especial significance for small and medium enterprises: with an integrated service they will not have to tie up entrepreneurial time on tedious accountancy for different agencies or spend money on expensive accountants.
It has also been argued that the merger is poorly timed as it comes in the middle of an information technology crisis caused by NIRS2. We know that major problems are occurring, but the simple fact is that those problems are contained in the NIRS2 system, which will simply be moved over, so they have no bearing on the decision.
NIRS2 was purchased from Andersen Consulting after it tendered at about a third of the price of its nearest rival. In spring 1996, about three months after the contract had been agreed, there was a secret meeting between Andersen Consulting and the then Chancellor, Secretary of State for Social Security and Chief Secretary to the Treasury, at which, as was recently disclosed to the Public Accounts Committee, they agreed to rip up the contract and replace the big bang approach—with everyone put in place at once and everything running hunky-dory—with a step-by-step approach.
The enormous problems that are arising—for instance, about 14.5 million contributions had not been posted correctly at the end of last year—are linked with that changed contract and with the mismatch of expectations and targets inherent in a defective agreement made behind closed doors by former Ministers and Andersen Consulting.
At the end of last year, only 61 per cent. of national insurance postings were in place, when the internal target was 90 per cent. When asked to comment, Andersen Consulting was comfortable with that fact and said that there was nothing wrong with the system and there must be something wrong with the Department's verification, or the validation of individual contributions, or perhaps

the employers did not really understand the forms. It said that it was conceivable that something was wrong but that it was nothing to do with the system itself.
It appears that the contract is drawn up so as to allow Andersen Consulting to avoid paying any real compensation, although there are compensation clauses. We are in the throes of putting the system back together to create a sensible regime and make progress, which I welcome, alongside the structural changes that we are implementing.
The merger makes sense from a business and a Government administration point of view. The legacy of operational difficulties that we have inherited is irrelevant to it. In my view, there is no conflict with the contributory principle and we should support the Bill with vigour.

Mr. Edward Leigh: Some hon. Members, on arriving here today, will have expected the debate to be highly technical and of interest only to those with a detailed knowledge of social security matters. However, it has been very interesting, especially because of the mini-debate between the right hon. Member for Birkenhead (Mr. Field) and the hon. Member for Newbury (Mr. Rendel). Both seemed to accept that the Bill was a fatal blow to the contributory principle that lies at the heart of our social security system. However, there was a slight dispute between them, as the hon. Member for Newbury seemed to imply that the contributory principle was already dead and that we should be realistic and kill it off finally with the Bill.
I do not think that the contributory principle is dead at all. As I said earlier, it is taken very seriously by those who work in the Department and by those who pay contributions for their entire lives. I once stood behind a constituent of the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) as she worked on a computer to calculate, to the nearest week, the contributions made by a particular gentleman over a working life of 40 years. Her hope was that that man's pension would bear some relation to what he had paid in contributions throughout his working life.
The Bill proposes merging the Contributions Agency into the Treasury. I should have liked it to be far more radical and interesting and to give greater independence to the Contributions Agency. The Bill that I should have preferred would have created a national contributions agency, based firmly and squarely on actuarial principles: people would pay a set proportion of income into a personalised fund that could be used later to fund their pensions. That would appear to be a radical reform, but it has been tried in many countries and there is nothing new about it.
We should be moving in that direction, but we are going the opposite way. The Government are not personalising the pension system at all. The Bill is about the Department of Social Security losing half its function. That is very serious. The DSS will be—primarily and exclusively—a delivery system. It will have no real involvement in raising the taxes and the contributions that fund the benefits that it pays out to people. It will be about as important as the man who delivers the milk, who has no input about what goes into the bottle. The Treasury will decide everything.
The Secretary of State gave the game away when he opened the debate. He is a former Treasury man, and he said that he had no qualms about the Treasury taking


more and more control over such matters. He is the Trojan horse, placed in charge of the Department by the Government to ensure its subservience to the Treasury. That is what the debate is all about. The Department of Social Security is paying for the bad karma—to use a topical word—of the Secretary of State's previous life as Chief Secretary to the Treasury, when he saw the reforms that the right hon. Member for Birkenhead was trying to introduce.
When I think of the future role of the DSS after this Bill and others like it are passed, I am reminded of a debate that took place in my family a few years ago. True, our income was large, but our outgoings were even larger, and for two days we discussed what we could save. Could we save on the mortgage, or on other big expenditures? We finally decided that we could save on birdseed.
The point of that story is that it does not matter that the Secretary of State will be dispersing £90 billion. He will have no real control over his budget and will no longer run an independent Department. That is a matter for sadness. It is an attack on something which all hon. Members should support—the contributory principle. Labour Members will troop through the Lobby tonight to support the Bill. They should be ashamed of themselves.

Ms Gisela Stuart: I am delighted to follow the hon. Member for Gainsborough (Mr. Leigh). I wonder whether he fed his birds with cake crumbs as a result of his savings measures. I am also somewhat intrigued to be taking part in a debate in which the Bill has been made out to be the end of welfare as we know it. Either I am missing something, or some extremely creative reading is going on.
The Bill is both necessary and welcome. When the Government came into office less than two years ago, the welfare system was in dire need of modernisation. That need was quite independent of any change of policy. The status quo was unacceptable: the technology was outdated and the system impossible to administer. There was a lack of cohesion, and benefit chimneys built up as a result.
I am intrigued that so many members of the Select Committee on Social Security are in the Chamber today. I am sure that they will recall a meeting with the Chancellor of the Exchequer at which the direction of the Government's welfare policy was discussed. My right hon. Friend the Chancellor said that we had grown up with a system under which Governments collected taxes into one pocket and handed out benefits from another. That system completely ignored the fact that the Government want people to work if they can, but he said that there was no way to get them back to work without some co-ordination of tax collection and the administration of benefits. My right hon. Friend told us that the philosophy of the Treasury and the Department of Social Security was to make work pay, which involved some co-ordination between taxation and benefits.
The Inland Revenue and Customs and Excise are the two main tax-collecting agencies, and the national insurance collection system also plays a part. However, the national insurance system, since its introduction after the second world war, has never been truly

insurance based. To some extent, the argument about hypothecation is phoney, as the fund is actuarially ring-fenced. That is significant.

Mr. Cousins: May I draw my hon. Friend's attention to a matter that hon. Members too often forget? At present annuity rates, to build up a personal pension plan that would bring in income at the basic pension rate would probably require establishing a contribution fund of about £80,000. As a matter of practical fact, millions of our constituents receive basic pension entitlements far more valuable at the basic rate than anything that they could aspire to if payment were made simply on the basis of what they could afford to contribute. In that fundamental and obvious sense, the national insurance system is still very much part of our social fabric.

Ms Stuart: My hon. Friend's intervention does not contradict the point that I am making. Also, low annuity rates reflect low inflation and a steady economy, so the whole economic climate must be taken into account when considering those rates.
I do not suggest that national insurance and the contributory principle have come to an end, but I draw the House's attention to some research by the Department of Social Security that was published in August 1998. The report stated:
respondents had little direct experience of benefits, and only a hazy perception of the structure of the National Insurance scheme; few had thought systematically about how they would cope with unemployment, sickness absence from work or retirement; in the absence of direct experience, media reports of policy debates or of issues such as fraud could be influential in shaping their views".
In view of the time, I shall not go into further detail, but the report makes it clear that a myth has been built up that members of the public have a clear idea of how taxation and national insurance contributions work.
I also recall some research that found that one third of school leavers did not realise that money would be deducted from their wages. Never mind what the various deductions might be—they did not think that anything would be deducted.
Let us focus on what the Bill will do, which is significant. As my right hon. Friend the Secretary of State made clear in his opening speech, the Bill does not, at this stage, change the way in which national insurance contributions are calculated or how they interact with taxation. However, it is a first step in bringing together that which must be brought together in the interests of good public policy and administration.
I beg the House's indulgence while I remind hon. Members of what the task force headed by Martin Taylor said when it considered the problems of alignment between income tax and national insurance. That is not a theological debate, but an examination of the concrete question of why the two systems do not work properly. The first main area of concern was the base of charge: income tax is levied on earned income and benefits in kind, whereas national insurance contributions do not currently reflect benefits in kind. Reliefs and rebates are inconsistent in relation to taxation; the periods of assessment are different; and the structures of charge are different. If the Government are serious about making work pay, the basis of national insurance and taxation must be aligned to some extent.
Martin Taylor said:
At present, benefits in kind are not subject to NICs, other than the employer-only Class 1A charge on company cars and car fuel. This gives employers an advantage in offering benefits in kind, so reducing the NICs yield and distorting competition. However, it does not look straightforward to value benefits in kind, at least on anything like the income tax rules".
He also argued that there was clear evidence that business and employers welcomed the combining of national insurance contributions and taxation, because that would be easier to administer. The previous Government failed to address the difference between the costs to Government and the costs to business. There may be considerable costs to the Government, but we must look seriously at the reaction of business.
I wish the Bill went further in one respect, which relates to schedule 6 and exchange of information. We are all concerned about confidentiality and privacy, but if we are—

Miss McIntosh: We are.

Ms Stuart: So are Labour Members. We have all seen constituents who complain about having to fill in endless forms to claim benefits and say, "But I told them before …" It seems to them that the same form has to be filled in again and again. That causes considerable hindrance, especially to pensioners who become sick and tired of filling in forms. There is scope for the greater transfer and integration of information gathered for benefits or taxation purposes, and that will help people in need. Similarly, we need to ensure that fraud is designed out of the system, for if fraud is prevented in the first place, we can stop wasting resources on chasing fraudsters.
I urge the House to take the Bill at face value. It is important administratively and will allow us to move forward to the second stage. Move forward we must, because the current benefits and taxation systems are unacceptable. I hope that the Opposition will see the error of their ways and welcome the Bill as I do.

Mr. Archy Kirkwood: It is a pleasure to follow the hon. Member for Birmingham, Edgbaston (Ms Stuart), who was a distinguished member of the Select Committee on Social Security and has now moved on to higher, if not necessarily better, things.
I agree that we have to move forward; no one would try to defend the status quo. However, two things struck me as I listened to the debate. The first was the Secretary of State's announcement that the date of implementation would be 1 April 1999. I am nervous, because I fear that that is too soon. Anyone who thinks that the transfer will be a straightforward and easy piece of work, to be carried out at administrative office level, is mistaken.
I understand that there is a political imperative: Governments always want to get things done and move forward, because if they fail to do so they are criticised for not moving fast enough. However, in my experience such changes, if they are not timed properly, can cause far more trouble than they are worth. Regardless of whether

changes are right or wrong, they have to be planned carefully. My concern is that we are trying to make the change too quickly and that the benefits of the change might be lost to us as a result. We might be unable to capture the positive results of the change if we do too much, too quickly.
The second point that struck me is that there is a huge cultural difference between the two Departments which has not been recognised in the debate. The way in which the Inland Revenue works, the time scales to which it does its calculations, its systems and its methods are entirely different from those employed by people working in DSS agencies such as the Contributions Agency.
I went on a brief visit to Newcastle with the Social Security Committee a few months ago. I was deeply impressed by the commitment of George Bertram and his staff and I am sure that they will make every effort to ensure that the change works. The hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) will agree that that is so. We often fail to recognise the work done on our behalf by civil servants in the agencies, so it is worth putting it on the record that they do a splendid job keeping a creaking system going, sometimes at great personal cost and for little reward. However, the combination of the culture shift that is needed and the time scale within which the change is planned cause me concern.
I support the Bill and will be happy to vote for its Second Reading. It comes as no shock to me to learn that there are to be changes to the tax structure and that the Government have in mind a design that aligns income tax and national insurance. That is obvious to anyone who is aware of the fact that, from this April, the Government are introducing changes to the employers class 1 contributions, which are to be raised to a new earnings threshold set at the level of personal tax allowances. There is clearly a big change in view. However, I should like to quote a couple of sentences from the Green Paper on welfare reform and ask a few questions about them.
The Green Paper said:
future reforms will align the lower earnings limit with the single person's tax allowance ensuring that no one pays National Insurance for the first £81 of their weekly earnings and that all employees earning between £64 and £81 would have their rights to benefit protected".
It is the last clause—
would have their rights to benefit protected"—
that causes me concern. If the lower earnings limit is to be raised in that way, how will those earning less than that be protected? What physical administrative steps are to be taken to keep track of their earnings? How does that fit in with the continuation of the contributory principle? That is an important question, because it is illustrative of how confused the Government might become in future if they are not clear about the direction in which they are going.
My second question is whether we should now recognise that national insurance contributions are a "social security tax". That is how the Chancellor inadvertently described NICs in a broadcast—a Freudian slip of which the right hon. Member for Birkenhead (Mr. Field) reminded the House earlier. If NICs are not such a tax, are we safe in the knowledge that the insurance principle is safe in the Labour Government's hands? The hon. Member for Edgbaston referred to a piece of research


of which I, too, am aware, our having shared it as members of the Social Security Committee. It reveals a huge vagueness and a lack of clear information about the relationship between contributions and entitlements.
I am perfectly willing to support this technical measure, but I am unhappy about slipping towards an abolition of the contributory principle without proper debate. Whether the principle is right or wrong, it is important to debate it properly and coherently. The Social Security Committee has already set its sights on an inquiry into the contributory principle—it has devoted a huge chunk of its yearly programme to that question. It may be that the principle can be modernised and given a new lease on life or that we should recognise reality—as my party believes—and abolish it. However, it is undeniable that we need a debate and that the Government should lead it. They should not seek to make changes by default. If the Secretary of State is to be believed, the Government need have no fears about that process. However, we shall hold it against the Secretary of State if he tries to achieve change through some back-door means or political sleight of hand.
The Secretary of State was correct to say that he will inform the House about existing practical difficulties with the national insurance recording system, NIRS2. However, the problem is much more fundamental. I think that our constituents deserve protection and compensation and I am worried that PFI—the private finance initiative—is no longer a sensible mechanism to consider when it comes to huge computerised systems in any Government Department.
I have another subsidiary question that relates to my earlier culture point. Andersen Consulting is to introduce a huge new system, NIRS2, into the Inland Revenue, but Electronic Data Services does all Inland Revenue computing at present. I foresee huge interface problems. It is a question of culture which I believe will be almost impossible to address between now and 1 April. I urge the Government to conduct a full-scale review of the mega computer data processing information technology projects with a view to ascertaining their future feasibility. I am sure that the National Audit Office will insist on such an inquiry.
I am interested in clause 20—it raises a point to explore in Committee—which refers to the ultra vires payment of nearly £500 million. Although there was a legislative duty to make some pension payments under the contracted-out money purchase schemes, there was no authority within the Pensions Act 1995 to finance them through the national insurance fund. That is a huge error and a huge amount of money. How was it discovered? Did the National Audit Office pick it up? That mega mistake allowed the Government to spend, ultra vires, £500 million in public money and, if the National Audit Office did not find it, I would like to know who did.
I am prepared to support the Bill, but the Government must move slowly in taking this administrative step. I hope that the Government will undertake to conduct a proper debate about the social insurance scheme principle before taking any steps down the road to diminution or change. The House of Commons must have a proper chance to debate the issues.

Mr. Steve Webb: I am delighted to see so many Labour Members in the Chamber to hear my contribution. The Bill raises some important issues, and I am delighted that the Government have allocated a full day of parliamentary time in which to discuss them.
It is a pleasure to follow my right hon. Friend in prospect, the Chairman of the Select Committee on Social Security, the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), who proposed a debate on the contributory principle. The Bill raises questions about the future of the principle that are mentioned explicitly in the Conservative reasoned amendment, which I shall address in my brief remarks.
The Conservative amendment urges hon. Members not to vote for the Bill because it will facilitate the ending of the contributory principle. Would that necessarily be such a bad thing? The national insurance system was introduced in the 1940s, with flat-rate contributions paying for flat-rate benefits. That was not pure insurance because the insurance premium paid did not relate to the risk of receiving benefit. The classic example is that male and female employees paid much the same contributions although they were entitled to pensions whether they lived to be 60 or 80. The system did not look much like pure insurance initially and, as time went on, it began to look less and less like an insurance system.
Earnings-related benefits and partly earnings-related contributions were introduced in the 1960s. Contributions became more earnings related in the 1970s and earnings-related pensions were introduced. During the 1980s—it is ironic that the Conservatives should be moving this reasoned amendment—national insurance rowed back from its high water mark of the late 1970s. The Conservatives made several significant changes, one of which was increasing national insurance contributions while cutting national insurance benefits. That is a clear erosion of any residual contributions principle.
My hon. Friend the Member for Newbury (Mr. Rendel) has already enunciated the official Liberal Democrat position, which allows me to indulge in some free thought, unfettered by the usual shackles of party discipline—I say that only to make my hon. Friend a touch nervous. What is the contributory principle that the Conservatives are so keen to defend and believe might be undermined by the Bill? It is that there is some close link between contributions and benefits. However, it is clear from the debate that any such link is extremely tenuous and is growing increasingly more so.
The case study in this area must be pensions. They are by far the largest item of contributory benefit expenditure and, if they do not honour the contributory principle truly, we might as well give up and go home. It has been said that the Bill does not involve abolition of the national insurance fund: a separate national insurance fund and a separate consolidated fund will continue. What a joke. What is the point of having a separate national insurance fund? If it does not have enough money, it is topped up through general taxation. Therefore, why preserve the farce that national insurance contributions are any different from general taxation? I would go further than that. More than half of national insurance revenues come from employer national insurance contributions that have no insurative content. So, the whole thing is a complete sham.
On the benefit side, in what sense are pensions—the main national insurance benefit—linked to national insurance contributions? The answer is that there is hardly any link. Growing numbers of people will reach old age and enjoy full entitlement to the basic state pension. These days, one must try quite hard to avoid that full entitlement in old age. What is the point of having all the paraphernalia for keeping records for 40 or 50 years when, at the end of the day, there is a flat-rate benefit? That is not insurance; it is taxation. We are no worse off for that.
We must ask ourselves a fundamental question: what would we lose if we abolished the national insurance contributory system? We would lose national insurance benefits as a category. Why do we have separate national insurance benefits as opposed to means-tested or categorical benefits? It seems to me that there is only one defence of separate national insurance benefits: people feel more positive about claiming them. There is less stigma and thus less of a problem with take-up.
That is also true of categorical benefits: there is no stigma associated with claiming child benefit or the age addition to the old-age pension. In the case of pensions—the main contributory benefit—we should do away with the farce that it is all to do with contributions. We should pay pensions to people as of right and build on the 25p age addition, which is not contributory because it is paid in full to anyone who receives a pension. It is categorical. The 25p age addition has all the qualities that we desire and, if we build on it and move to a system in which the basic state pension is tiered with age, we will be able to target poverty effectively without relying on means-testing. The whole point of national insurance benefits is to reach people about whom we might be worried, but that can be done through other means, principally through the basic state pension, tiering that to age.
My final reflection on national insurance benefits is that they are a system not of inclusion, but of social exclusion. As the hon. Member for Croydon, Central (Mr. Davies) said, those benefits were designed for a world of male, full-time workers. In other words, they exclude large numbers of women from benefits. Do we want to preserve that system into the 21st century? Clearly not, in my judgment. Most people receive basic pensions, but many women and low-paid workers are excluded. Why not move to a system of categorical benefits for pensioners?
In conclusion, there is no case whatsoever for a separate system in which national insurance contributions go into a pot—if there is not enough money in it we find more from somewhere else—and in which we pay out a categorical benefit to elderly people which excludes only a few vulnerable people. My hon. Friend the Member for Roxburgh and Berwickshire is right to say that we need a debate on this subject, but the Conservatives' reasoned amendment which suggests that we should not vote for the Bill because it would undermine the contributory principle is fundamentally flawed.

Mr. Quentin Davies: There is a general sense in the House that the winding-up speeches in this debate should not be too long, so I shall try to be brief and I hope I shall be forgiven for not dealing with all the individual contributions in the detail that a great many of them deserve.
The debate has been a memorable example of the utility of Parliament and of Second Reading debates, because what was regarded by many hon. Members—and, no doubt, most people in the country—as a Bill that dealt with a boring administrative adjustment under a boring bureaucratic title has been revealed as a momentous and extremely damaging step towards the destruction of our national insurance system.
Not only has the decision of my hon. Friends and me to oppose the Bill been thoroughly vindicated by what has emerged regarding its true nature and intent, but we have had high drama—a chasm of difference on this subject has emerged within the Labour party. The Secretary of State has gone on the record this evening as saying that the Government are examining the whole contributory principle—so the cat is out of the bag. The agenda is absolutely clear. Some Labour Back Benchers have reacted with necessary horror. I refer to the distinguished contribution of the right hon. Member for Birkenhead (Mr. Field), who described the move as extreme folly and an extraordinary policy, as indeed it is.
Labour Back Benchers who are more obviously loyal—I think that that is the polite description—have promoted an even more far-reaching agenda and suggested that the Bill ought to go the whole hog and entirely remove the separate character of our national insurance system.
It was obvious to all of us who read the Bill when it was published that it represents, at the very least, the abject subjugation of the Department of Social Security to the Treasury. The Bill is full of phrases such as
such payments by way of adjustment as the Secretary of State determines (in accordance with any directions of the Treasury)",
and
such payments by way of adjustment as the Inland Revenue may determine",
and
any determination by the Secretary of State under that subsection must be made in accordance with any directions given by the Treasury.
The Bill represents complete surrender by the DSS to the Treasury."
Some people will ask, "What is new?" because that has been the de facto position, certainly for the last year and probably since the last election. We know that the Treasury vetoed the pensions Green Paper drafted by the right hon. Member for Birkenhead and has been giving instructions to the DSS during the past six months steadily to increase the element of means testing in our welfare system, with the sad consequences that have been described by many hon. Members today. I have no idea whether the firm reaction by Opposition Members to that extremely damaging tendency over the past weeks and months has brought about a rethink by the Government. If it has not, it is clear that the agenda has a very long way to go.
It is obvious that the Treasury has been running the show for some time. I remember, at Treasury questions not so long ago, asking the Secretary of State, then Chief Secretary to the Treasury, whether there was any point in having the DSS, since the Benefits Agency was responsible for handing out the money in the country and the Treasury obviously made the policy in Whitehall. In his usual way, the right hon. Gentleman managed to avoid giving a straight answer. Now we have the Bill, and we see, de jure, written into our law, the shift of the DSS


towards becoming an executive agency of the Treasury—a shift to which we have been drawing the attention of the House and the public for some months.
As if that were not enough, the Secretary of State has revealed this evening that he is giving the Treasury the Department's policy function as well as its administrative function. As the right hon. Member for Birkenhead said, the Secretary of State has given away at a stroke half his empire and 40 per cent. of his revenue.
There has been a sub-plot this evening which, as in the best Shakespearean tradition, has acted to some extent as farce to heighten the high drama of the main plot. A chasm is emerging between Liberal Democrats, or what is left of them. The Liberal Democrat spokesman on pensions, the hon. Member for Northavon (Mr. Webb), is so keen to fawn on the Government at every opportunity that he said that the contributory principle was as good as dead and buried. Beveridge, Lloyd George and Asquith would be turning in their graves if they knew that, at the end of the century which began with the Liberal party being a great force in the land, the party's last remaining representatives were prepared to go along with a new Labour Government to bury one of the great achievements of the Liberalism of their day.
It is much to the credit of Liberal Democrat Back Benchers such as the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), who could not avoid their duty, that they subtly but decisively, as the hon. Gentleman so bravely did, rejected the subservient course adopted by the Liberal Front Bench.
The great concern of the House this evening must not be the Secretary of State's loss of amour-propre or the destruction of the DSS, let alone the puny arguments of the modern Liberal party, but the people of this country, who have been proud of their national insurance system. They have contributed to that system and continue to do so in good faith, but they now find that the Government's agenda is to undermine it and bring to naught what has been built up as one of the great achievements of 20th-century politics in the United Kingdom.

The Minister of State, Department of Social Security (Mr. Stephen Timms): This has been a wide-ranging and interesting debate. It is hard to believe from the speech of the hon. Member for Grantham and Stamford (Mr. Davies) that this is a technical Bill, which moves around parts of the machinery of government. We have had the opportunity to range over topics from welfare reform and the contributory principle to the information technology system used in the Contributions Agency. Very little has been said, certainly by Conservative Members, about what the Bill does.
It has been established during the debate that representatives of business and—as my right hon. Friend the Secretary of State drew to the attention of the House—the shadow Chancellor, the right hon. Member for Horsham (Mr. Maude), think that what the Bill does is right. Indeed, they think that it is overdue because of the failure—as so often—of the previous Government to act. Business does not want the transfers to be delayed, especially not on the wholly specious grounds advanced by Conservative Members.
The shadow Chancellor supported what is proposed in the Bill in 1995 in a report to the then Deputy Prime Minister, the right hon. Member for Henley

(Mr. Heseltine). I do not know whether members of the shadow Cabinet ever talk to each other about these matters. The hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) said that he was a friend of the shadow Chancellor. The shadow Chancellor supports what the Bill does, yet the Opposition are opposing it. Now that we have the benefits of joined-up government, it is a shame that we cannot have a little joined-up opposition as well.
I commend to Opposition Members the shadow Chancellor's views on this matter. It would be well worth their while reading them. The right hon. Gentleman very clearly spelled out in the report of his deregulation task force, which was published in autumn 1995, that he was arguing for
closer alignment of the PAYE and National Insurance contributions systems, to be administered by a single agency".
He went on:
Apart from saving public money, this would eliminate the burden of double accountability and interference for employers, and reduce the time needed for workplace taxation. This issue has been endlessly debated in Whitehall. A decision should now be made.
Of course, he was absolutely right. Conservative Members should take note of his views. Despite his robust support, we anticipate the ludicrous sight of Opposition Members opposing this straightforward technical measure, the only effect of which is to reduce the burden on employers.
Has something changed since the shadow Chancellor reached his eminently sensible conclusion? That is not so according to the Chartered Institute of Taxation, which said in October:
We are pleased to note that the Inland Revenue and the Contributions Agency are to merge their field forces".
The Institute of Directors, to which the hon. Member for Vale of York (Miss McIntosh) referred, said in October:
We welcome the transfer of the Contributions Agency to the Revenue".
The British Chambers of Commerce—what a long way we have come from the days when the Tory party saw itself as the voice of small business—said in October:
the merging of the Contributions Agency into the Inland Revenue has our full support".
Yet the Opposition are opposing the Bill. The shadow Chancellor's excellent report, which I commend again to Opposition Members, spells out at some length the benefits of the measure.
My right hon. Friend the Member for Birkenhead (Mr. Field) expressed concern about the transfer of national insurance policy. I want to make it clear that that transfer was part of the Bill from the outset. It was in schedule 3 to the Bill that was debated in the other place. Policy on benefits entitlement will of course remain with the Department of Social Security. The policy concerned is dealt with by 20 people; a very small number of people are transferring from the DSS to the Inland Revenue.
My hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins) welcomed the Bill. I am particularly grateful that he was able to do so on behalf—quite rightly—of his constituents, many of whom work for the Contributions Agency in Longbenton.
The hon. Members for Newbury (Mr. Rendel) and for Northavon (Mr. Webb) also welcomed the Bill, for which I am grateful. The hon. Member for Vale of York said that she could not understand the case for the Bill. I simply refer her to the case made by the shadow Chancellor, which she will find very informative.
My hon. Friend the Member for Croydon, Central (Mr. Davies) was absolutely right to draw attention to the measure's benefits, not just in terms of Government spending but to business and the nation as a whole. That is the basis for the change that we are making, and the basis on which I commend the Bill to the House. We shall no doubt have some interesting debates in Committee. The Bill is technical: it makes sensible changes to improve the administration of the national insurance system, which have long been argued for by many Members on both sides of the House.
Such moves of the machinery of government are as old as bureaucracy itself. The Inland Revenue was formed in 1834 by the amalgamation of the then boards of stamps and taxes. The Treasury directed the commissioners of stamps and taxes to recall
the necessity of making arrangements, as expeditiously as possible, for consolidating the duties of the several offices employed under your direction with a view to effect every practicable reduction in your United Departments which may be consistent with the security of the Revenue.
Opposition Members would no doubt have been against that.
We, too, seek to maintain the Revenue's security in the integrity of contribution records and benefits. Rather than cutting costs for the sake of cutting costs, the transfer is driven by a determination to deliver better service. As the shadow Chancellor has pointed out, it is a sensible measure. I ask the House to support it.

Question put, That the amendment be made:—

The House divided: Ayes 132, Noes 322.

Division No. 60]
[7.17 pm


AYES


Amess, David
Colvin, Michael


Arbuthnot, Rt Hon James
Cormack, Sir Patrick


Atkinson, Peter (Hexham)
Cran, James


Bercow, John
Curry, Rt Hon David


Beresford, Sir Paul
Davies, Quentin (Grantham)


Blunt, Crispin
Davis, Rt Hon David (Haltemprice)


Boswell, Tim
Day, Stephen


Bottomley, Peter (Worthing W)
Dorrell, Rt Hon Stephen


Bottomley, Rt Hon Mrs Virginia
Duncan, Alan


Brady, Graham
Duncan Smith, Iain


Brazier, Julian
Emery, Rt Hon Sir Peter


Browning, Mrs Angela
Evans, Nigel


Bruce, Ian (S Dorset)
Faber, David


Burns, Simon
Fabricant, Michael


Butterfill, John
Fallon, Michael


Cash, William
Forth, Rt Hon Eric


Chapman, Sir Sydney
Fowler, Rt Hon Sir Norman


(Chipping Barnet)
Fox, Dr Liam


Chope, Christopher
Fraser, Christopher


Clappison, James
Gale, Roger


Clark, Rt Hon Alan (Kensington)
Garnier, Edward


Clark, Dr Michael (Rayleigh)
Gibb, Nick


Clarke, Rt Hon Kenneth
Gill, Christopher


(Rushcliffe)
Gillan, Mrs Cheryl


Clifton-Brown, Geoffrey
Gorman, Mrs Teresa





Green, Damian
Paice, James


Greenway, John
Paterson, Owen


Grieve, Dominic
Pickles, Eric


Gummer, Rt Hon John
Prior, David


Hammond, Philip
Randall, John


Hawkins, Nick
Redwood, Rt Hon John


Hayes, John
Robertson, Laurence (Tewk'b'ry)


Heald, Oliver
Roe, Mrs Marion (Broxbourne)


Heathcoat-Amory, Rt Hon David
Rowe, Andrew (Faversham)


Heseltine, Rt Hon Michael
Ruffley, David


Horam, John
St Aubyn, Nick


Howarth, Gerald (Aldershot)
Sayeed, Jonathan


Jackson, Robert (Wantage)
Shepherd, Richard


Jenkin, Bernard
Spelman, Mrs Caroline


Johnson Smith,
Spicer, Sir Michael


Rt Hon Sir Geoffrey
Spring, Richard


Key, Robert
Stanley, Rt Hon Sir John


King, Rt Hon Tom (Bridgwater)
Steen, Anthony


Kirkbride, Miss Julie
Streeter, Gary


Laing, Mrs Eleanor
Swayne, Desmond


Lait, Mrs Jacqui
Tapsell, Sir Peter


Lansley, Andrew
Taylor, Ian (Esher & Walton)


Leigh, Edward
Taylor, John M (Solihull)


Letwin, Oliver
Taylor, Sir Teddy


Lewis, Dr Julian (New Forest E)
Tredinnick, David


Lidington, David
Trend, Michael


Lilley, Rt Hon Peter
Tyrie, Andrew


Lloyd, Rt Hon Sir Peter (Fareham)
Viggers, Peter


Loughton, Tim
Walter, Robert


Luff, Peter
Wardle, Charles


MacGregor, Rt Hon John
Waterson, Nigel


McIntosh, Miss Anne
Wells, Bowen


MacKay, Rt Hon Andrew
Whitney, Sir Raymond


Maclean, Rt Hon David
Whittingdale, John


McLoughlin, Patrick
Widdecombe, Rt Hon Miss Ann


Malins, Humfrey
Wilkinson, John


Maples, John
Willetts, David


Mates, Michael
Wilshire, David


Mawhinney, Rt Hon Sir Brian
Woodward, Shaun


May, Mrs Theresa
Yeo, Tim


Moss, Malcolm
Young, Rt Hon Sir George


Nicholls, Patrick
Tellers for the Ayes:


Ottaway, Richard
Sir David Madel and


Page, Richard
Mr. Tim Collins.




NOES


Abbott, Ms Diane
Bradley, Peter (The Wrekin)


Ainsworth, Robert (Cov'try NE)
Bradshaw, Ben


Allan, Richard
Brinton, Mrs Helen


Anderson, Donald (Swansea E)
Brown, Russell (Dumfries)


Anderson, Janet (Rossendale)
Bruce, Malcolm (Gordon)


Armstrong, Ms Hilary
Buck, Ms Karen


Ashton, Joe
Burgon, Colin


Atherton, Ms Candy
Burstow, Paul


Atkins, Charlotte
Butler, Mrs Christine


Austin, John
Caborn, Richard


Ballard, Jackie
Campbell, Alan (Tynemouth)


Banks, Tony
Campbell, Mrs Anne (C'bridge)


Barron, Kevin
Campbell, Menzies (NE Fife)


Bayley, Hugh
Campbell, Ronnie (Blyth V)


Beard, Nigel
Campbell-Savours, Dale


Beckett, Rt Hon Mrs Margaret
Cann, Jamie


Bell, Martin (Tatton)
Caplin, Ivor


Bell, Stuart (Middlesbrough)
Chapman, Ben (Wirral S)


Benn, Rt Hon Tony
Chidgey, David


Bennett, Andrew F
Chisholm, Malcolm


Benton, Joe
Clapham, Michael


Bermingham, Gerald
Clark, Rt Hon Dr David (S Shields)


Berry, Roger
Clark, Dr Lynda


Best, Harold
(Edinburgh Pentlands)


Betts, Clive
Clark, Paul (Gillingham)


Blunkett, Rt Hon David
Clarke, Charles (Norwich S)


Boateng, Paul
Clarke, Eric (Midlothian)


Borrow, David
Clarke, Rt Hon Tom (Coatbridge)


Bradley, Keith (Withington)
Clarke, Tony (Northampton S)






Clwyd, Ann
Heppell, John


Coaker, Vernon
Hesford, Stephen


Coffey, Ms Ann
Hewitt, Ms Patricia


Cohen, Harry
Hill, Keith


Coleman, Iain
Hinchliffe, David


Colman, Tony
Hodge, Ms Margaret


Cook, Frank (Stockton N)
Hoon, Geoffrey


Cook, Rt Hon Robin (Livingston)
Hopkins, Kelvin


Cooper, Yvette
Howarth, Alan (Newport E)


Corbett, Robin
Howells, Dr Kim


Corston, Ms Jean
Hoyle, Lindsay


Cousins, Jim
Hughes, Ms Beverley (Stretford)


Crausby, David
Hughes, Kevin (Doncaster N)


Cryer, Mrs Ann (Keighley)
Humble, Mrs Joan


Cryer, John (Hornchurch)
Hurst, Alan


Cunningham, Rt Hon Dr Jack
Hutton, John


(Copeland)
Iddon, Dr Brian


Cunningham, Jim (Cov'try S)
Illsley, Eric


Curtis-Thomas, Mrs Claire
Jackson, Ms Glenda (Hampstead)


Dalyell, Tam
Jackson, Helen (Hillsborough)


Darling, Rt Hon Alistair
Jamieson, David


Darvill, Keith
Johnson, Miss Melanie


Davey, Valerie (Bristol W)
(Welwyn Hatfield)


Davies, Rt Hon Denzil (Llanelli)
Jones, Barry (Alyn & Deeside)


Davies, Geraint (Croydon C)
Jones, Helen (Warrington N)


Dean, Mrs Janet
Jones, Ms Jenny


Denham, John
(Wolverh'ton SW)


Dobbin, Jim
Jones, Jon Owen (Cardiff C)


Dobson, Rt Hon Frank
Jones, Dr Lynne (Selly Oak)


Donohoe, Brian H
Kaufman, Rt Hon Gerald


Doran, Frank
Keeble, Ms Sally


Drew, David
Keen, Alan (Feltham & Heston)


Drown, Ms Julia
Keen, Ann (Brentford & Isleworth)


Dunwoody, Mrs Gwyneth
Kelly, Ms Ruth


Eagle, Angela (Wallasey)
Kemp, Fraser


Eagle, Maria (L'pool Garston)
Khabra, Piara S


Ellman, Mrs Louise
Kidney, David


Ennis, Jeff
King, Andy (Rugby & Kenilworth)


Etherington, Bill
King, Ms Oona (Bethnal Green)


Fearn, Ronnie
Kingham, Ms Tess


Fisher, Mark
Kirkwood, Archy


Fitzsimons, Lorna
Kumar, Dr Ashok


Flint, Caroline
Ladyman, Dr Stephen


Flynn, Paul
Lawrence, Ms Jackie


Follett, Barbara
Laxton, Bob


Foster, Don (Bath)
Lepper, David


Foster, Michael Jabez (Hastings)
Leslie, Christopher


Foster, Michael J (Worcester)
Levitt, Tom


Foulkes, George
Lewis, Ivan (Bury S)


Fyfe, Maria
Livingstone, Ken


Galbraith, Sam
Lloyd, Tony (Manchester C)


Galloway, George
Llwyd, Elfyn


Gapes, Mike
Love, Andrew


Gardiner, Barry
McAllion, John


George, Bruce (Walsall S)
McAvoy, Thomas


Gerrard, Neil
McCafferty, Ms Chris


Gibson, Dr Ian
McDonagh, Siobhain


Gilroy, Mrs Linda
McIsaac, Shona


Godman, Dr Norman A
McKenna, Mrs Rosemary


Godsiff, Roger
Mackinlay, Andrew


Goggins, Paul
Maclennan, Rt Hon Robert


Gordon, Mrs Eileen
McNulty, Tony


Griffiths, Jane (Reading E)
MacShane, Denis


Griffiths, Nigel (Edinburgh S)
Mactaggart, Fiona


Griffiths, Win (Bridgend)
McWilliam, John


Hall, Mike (Weaver Vale)
Mahon, Mrs Alice


Hamilton, Fabian (Leeds NE)
Mallaber, Judy


Hanson, David
Marsden, Gordon (Blackpool S)


Harvey, Nick
Marsden, Paul (Shrewsbury)


Heal, Mrs Sylvia
Marshall, Jim (Leicester S)


Heath, David (Somerton & Frome)
Maxton, John


Henderson, Doug (Newcastle N)
Meacher, Rt Hon Michael


Henderson, Ivan (Harwich)
Meale, Alan


Hepburn, Stephen
Merron, Gillian





Michie, Bill (Shef'ld Heeley)
Smith, Rt Hon Chris (Islington S)


Mitchell, Austin
Smith, Miss Geraldine


Moffatt, Laura
(Morecambe & Lunesdale)


Moonie, Dr Lewis
Smith, Jacqui (Redditch)


Morgan, Alasdair (Galloway)
Smith, John (Glamorgan)


Morley, Elliot
Smith, Llew (Blaenau Gwent)


Mountford, Kali
Snape, Peter


Mudie, George
Soley, Clive


Mullin, Chris
Southworth, Ms Helen


Murphy, Denis (Wansbeck)
Starkey, Dr Phyllis


Naysmith, Dr Doug
Steinberg, Gerry


Oaten, Mark
Stevenson, George


O'Brien, Bill (Normanton)
Stewart, David (Inverness E)


O'Brien, Mike (N Warks)
Stewart, Ian (Eccles)


Olner, Bill
Stinchcombe, Paul


O'Neill, Martin
Stoate, Dr Howard


Öpik, Lembit
Strang, Rt Hon Dr Gavin


Organ, Mrs Diana
Straw, Rt Hon Jack


Palmer, Dr Nick
Stringer, Graham


Pearson, Ian
Stuart, Ms Gisela


Pendry, Tom
Stunell, Andrew


Perham, Ms Linda
Sutcliffe, Gerry


Pickthall, Colin
Taylor, Rt Hon Mrs Ann


Pike, Peter L
(Dewsbury)


Plaskitt, James
Taylor, Ms Dari (Stockton S)


Pollard, Kerry
Taylor, David (NW Leics)


Pond, Chris
Taylor, Matthew (Truro)


Pope, Greg
Temple-Morris, Peter


Pound, Stephen
Thomas, Gareth R (Harrow W)


Powell, Sir Raymond
Timms, Stephen


Prentice, Ms Bridget (Lewisham E)
Tipping, Paddy


Prentice, Gordon (Pendle)
Touhig, Don


Prescott, Rt Hon John
Trickett, Jon


Primarolo, Dawn
Truswell, Paul


Prosser, Gwyn
Turner, Dennis (Wolverh'ton SE)


Purchase, Ken
Turner, Dr Desmond (Kemptown)


Quin, Ms Joyce
Twigg, Derek (Halton)


Quinn, Lawrie
Twigg, Stephen (Enfield)


Radice, Giles
Tyler, Paul


Rammell, Bill
Vaz, Keith


Rapson, Syd
Vis, Dr Rudi


Raynsford, Nick
Walley, Ms Joan


Reed, Andrew (Loughborough)
Ward, Ms Claire


Reid, Rt Hon Dr John (Hamilton N)
Wareing, Robert N


Rendel, David
Watts, David


Roche, Mrs Barbara
Webb, Steve


Rooker, Jeff
White, Brian


Rooney, Terry
Wicks, Malcolm


Ross, Ernie (Dundee W)
Williams, Rt Hon Alan


Rowlands, Ted
(Swansea W)


Ruddock, Ms Joan
Williams, Alan W (E Carmarthen)


Russell, Ms Christine (Chester)
Wills, Michael


Ryan, Ms Joan
Winnick, David


Sanders, Adrian
Winterton, Ms Rosie (Doncaster C)


Savidge, Malcolm
Wise, Audrey


Sawford, Phil
Wood, Mike


Sedgemore, Brian
Woolas, Phil


Shaw, Jonathan
Worthington, Tony


Sheldon, Rt Hon Robert
Wright, Anthony D (Gt Yarmouth)


Simpson, Alan (Nottingham S)
Wyatt, Derek


Skinner, Dennis
Tellers for the Noes:


Smith, Rt Hon Andrew (Oxford E)
Mr. David Clelland and


Smith, Angela (Basildon)
Mr. Jim Dowd.

Question accordingly negatived.

Main Question put forthwith, pursuant to Standing Order No. 62 (Amendment on Second or Third Reading), and agreed to.

Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 63 (Committal of Bills).

Orders of the Day — SOCIAL SECURITY CONTRIBUTIONS (TRANSFER OF FUNCTIONS, ETC.) BILL [LORDS] [MONEY]

Queen's recommendation having been signified—

Motion made, and Question put forthwith, pursuant to Standing Order No. 52(1)(a),
That, for the purposes of any Act resulting from the Social Security Contributions (Transfer of Functions, etc.) Bill [Lords], it is expedient to authorise the payment out of money provided by Parliament of—

(a) any expenses incurred by a Minister of the Crown or government department under the Act, and
(b) any increase attributable to the Act in the sums which under any other Act are payable out of money so provided.—[Mr. Mike Hall.]

Question agreed to.

Orders of the Day — SOCIAL SECURITY CONTRIBUTIONS (TRANSFER OF FUNCTIONS, ETC.) BILL [LORDS] [WAYS AND MEANS]

Motion made, and Question put forthwith, pursuant to Standing Order No. 52(1)(a),
That, for the purposes of any Act resulting from the Social Security Contributions (Transfer of Functions, etc.) Bill [Lords], it is expedient to authorise a payment out of the National Insurance Fund into the Consolidated Fund in respect of payments made under section 42A(3) of the Pension Schemes Act 1993.—[Mr. Mike Hall.]

Question agreed to.

Orders of the Day — DELEGATED LEGISLATION

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

NORTHERN IRELAND

That the draft Departments (Northern Ireland) Order 1999, which was laid before this House on 26th January, be approved.—[Mr. Mike Hall.]

Question agreed to.

Orders of the Day — BUSINESS OF THE HOUSE

Ordered,
That, at the sitting on 11th February, notwithstanding Standing Order No. 16 (Proceedings under an Act or on European Union documents), the Speaker shall—

(i) put the Questions on the Motions in the name of Mr. Secretary Michael relating to Local Government Finance (Wales) not later than Four o'clock;
(ii) put the Questions on the Motions in the name of Mr. Secretary Dewar relating to the Local Government Finance (Scotland) Order 1999 and the draft Housing Support Grant (Scotland) Order 1999 not later than one and a half hours after the commencement of proceedings on the first such Motion; and
(iii) put the Questions on any Motions in the name of Mr. Secretary Dewar relating to the draft Scotland Act 1998 (Transitional and Transitory Provisions) (Finance) Order 1999 and the draft Scotland Act 1998 (Transitional and Transitory Provisions) (Appropriations) Order 1999 not later than Seven o'clock.—[Mr. Mike Hall.]

Orders of the Day — Food Standards

Motion made, and Question proposed,

That a select committee of thirteen Members be appointed to report on the draft bill on the Food Standards Agency (Cm. 4249);
That Ms Diana Organ, Ms Sally Keeble, Audrey Wise, Dr. Howard Stoate, Dr. Lewis Moonie, Mr. Martyn Jones, Mr. Kevin Barron, Dr. Stephen Ladyman, Mr. Owen Paterson, Mr. David Curry, Mr. Robert Walter, Dr. Peter Brand and the Reverend Martin Smyth be members of the Committee;
That the Committee have power

(a) to send for persons, papers and records;
(b) to sit notwithstanding any adjournment of the House;
(c) to adjourn from place to place within the United Kingdom;
(d) to appoint specialist advisers; and
(e) to communicate to any select committee of either House their evidence and any other documents relating to matters of common interest; and
That the Committee shall report by 31st March 1999.—[Mr. Mike Hall.]

Mr. Peter Luff: I am sorry that I must detain the House for a few minutes on the motion. However, I am glad to see the Leader of the House in her place. I dictated a letter to the right hon. Lady this morning, which I shall still be sending. There are important issues relating to the motion that the House needs to pause to consider before it pushes the motion through on the nod. I refer especially to the last line of the motion, which reads:
That the Committee shall report by 31st March 1999.
The House will be aware that I am the Chairman of the Select Committee on Agriculture, which considered food safety and the Government's proposals and published a report in April 1998. I say at the outset that I am delighted that the Government are engaged in a process of pre-legislative scrutiny on this very important measure. I have no argument about that. In doing so, the Government are following a precedent that was beginning to be established by the previous Government. It is a process that the House should follow much more regularly. However, if pre-legislative scrutiny is to be effective, it must be done well. I doubt whether the time scale that is open to the Committee for consideration of the draft Bill is adequate to enable it to do its job well.
By my calculations, if the Committee were to be convened this week for its first meeting to elect its Chairman, it would be inviting written evidence in, say, weeks two and three, taking its first oral evidence in weeks four or five—no doubt it would go at least to a sixth week—considering its report in week seven and publishing it in week eight. That is a ridiculously truncated timetable for such an important measure—one to which the Government rightly attach considerable importance.
Compare and contrast the timetable for the Bill with the timetable for the consideration by the Select Committee on Social Security of pensions on divorce—pension splitting. That Committee took some 35 weeks to consider its proposals on an admittedly detailed and complex point of law. It had eight sessions of oral evidence, which began on 24 June and ended on 16 September. The Committee eventually published its


report on 28 October. It rightly called 33 witnesses from 11 different organisations. It called the Minister responsible and officials from the relevant Departments on two separate occasions. That is the right sort of time to give to pre-legislative scrutiny.
It is interesting to note the Committee's last recommendation, which reads:
We recommend that Bills which are to be published in draft for pre-legislative scrutiny by a select committee in the Session before their formal introduction should be published no later than Easter, in order to allow potential witnesses plenty of time to prepare their evidence and the select committee to complete its work before the end of the session.
The Select Committee on Social Security made the clear assumption that a Bill should be published in draft in one Session and introduced in the following Session. We know the history of this—there is House of Lords reform—and I will not weary the House with it, but in this instance it is the Government's intention that pre-legislative scrutiny should take place over two months before Easter and that the Bill should be introduced for consideration in Standing Committee after Easter, for consideration to be completed in this parliamentary term.
That does not seem enough time to me. I talked to the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), who chairs the Select Committee on Social Security. He told me that one problem was that witnesses came with an initial view on how the proposed legislation would work and then, sometimes after giving evidence to the Committee orally, returned with additional written evidence, on reflection, setting out what they thought the implications of the legislation would be. That seems entirely reasonable. The pre-legislative scrutiny period should be sufficiently flexible to allow that sort of dialogue.
After all, the House is seeking to ensure with pre-legislative scrutiny that Bills are better drafted. That is the point of it. I vividly recall when I was asked for various reasons to speak at considerable length on a one-clause Bill. I spoke for a morning and a half in Standing Committee and found that that legislation was significantly improved. It is right that the House should pay more attention to the way in which legislation is drafted. It is right also that the Government should assume pre-legislative scrutiny, and I welcome that. However, it is not right to confine that scrutiny to two months.
The Government, in their response to the Select Committee on Social Security, congratulated it on the detailed way in which it had considered legislation. The Minister of State, the hon. Member for East Ham (Mr. Timms), who has only recently today spoken from the Dispatch Box, said:
We very much welcome the Committee's constructive response. You deserve great credit for your thorough examination of the draft legislation. You have been instrumental in taking forward the proposals of the Modernisation Committee to improve Parliamentary scrutiny of proposed legislation.
Noticeably, in their reply to the Select Committee, the Government, for perfectly understandable reasons, ducked any comment on the specific recommendation about the timetable for pre-legislative scrutiny. They said that it was a matter for the Modernisation Committee. I believe that they are right. It is also a matter for the whole House.
We should welcome the Government's intentions with regard to pre-legislative scrutiny, but we should say that, if this process is not to be discredited very early in its

parliamentary history, it must be done well. Given the many constraints on Members' time and the need to give witnesses outside this place a decent amount of time to prepare for what they regard as a very important occasion—it concerns their lives as representatives of organisations with an interest in food safety—I do not believe that the timetable provides enough time.
As Chairman of the Select Committee on Agriculture, I can say that we took six or seven months to produce a report on food safety. I still think that, if anything, the report tended to be superficial. I would have liked to examine many issues in greater depth as part of the report. I appreciate that the issue is now more focused because we are dealing with the Bill itself, not the whole gamut of food safety. I still think, however, that a scant eight weeks is not enough. I urge the Government to reconsider whether this is the right way to proceed with the Bill; and whether it will enhance the dignity of the process of pre-legislative scrutiny.

The President of the Council and Leader of the House of Commons (Mrs. Margaret Beckett): I shall not take up the time of the House because we are dealing with a procedural motion to appoint a Committee. I understand from the remarks of the hon. Member for Mid-Worcestershire (Mr. Luff) that he does not oppose the setting up of the Committee. Indeed, he welcomes it. He does not oppose the use of the procedure. He welcomes that, too, and that is very helpful. However, he thinks that we should have provided for more time.
I entirely share the hon. Gentleman's view and that of the right hon. Member for East Devon (Sir P. Emery), who objected to the motion in the first place last week—in the past, the right hon. Gentleman has been a distinguished advocate of modernisation of the sort that we are discussing, so I was a little sorry as well as surprised to see him taking such action—that we should use the procedure of pre-legislative scrutiny more regularly, and the Government would wish that. However, that presumes that everyone wants to use the procedure for the purpose for which it is intended.
I repeat that this is a motion to set up a Committee and to enable some scrutiny. The purpose of the timetable, as the hon. Member for Mid-Worcestershire may have observed, is to tie up with the deadline for the closure of the public consultation process, which finished on 24 March. That is why the Committee is asked to report on 31 March.
The hon. Gentleman spoke of the need to have a much longer period of scrutiny and to allow for far more witnesses to give evidence, as if there were great concern outside this place. If there were, that would be a matter of great importance. As I understand it, however, no one in the food industry has made any complaint about the timetable that the Government are pursuing. Indeed, as recently as this week, the National Farmers Union and food industry representatives have indicated that they are content with the procedure.

Mr. Luff: If I understand the right hon. Lady correctly, she is saying that written evidence to the Government has to be in by the end of March but written evidence to the Select Committee will have to be in by the end of February, or even earlier. There could be considerable


inconsistencies between the evidence received by the Select Committee in writing and that which the Government receive in writing at the end of their consultation period.

Mrs. Beckett: I find that hard to believe, especially as presumably those whose evidence the hon. Gentleman would most wish to hear are not expressing concern about this issue or about the timetable. That brings me to the main point which I think arises on this use of the pre-legislative scrutiny procedure. It is that the Government might well not have tied time so tightly to the end of the general consultation had it not been for the fact that we are anxious to legislate on this matter this Session, believing it to be very much in the public interest and a matter of public safety. I wonder—the question arises if this issue is to detain us at any length—whether this is a matter of holding up the Bill, which as we all know some Members oppose.

Mr. Luff: Will the right hon. Lady give way?

Mrs. Beckett: Not for a moment. I shall finish the point that I am making.
The indication given by the right hon. Member for East Devon on a point of order, when he obstructed the motion at the end of last week, was precisely that he opposed the subject matter of the Bill and the accompanying measures.
The Government are anxious that the Bill should not be held up. The question is ultimately whether the House wants the Bill. There will, of course, be ample opportunity to debate the proposals and the Bill when it finally comes before the House. I repeat: the issue now is whether we set up such a Committee, and whether it considers the matter in the way that the motion allows.
The procedure has been welcomed in all parts of the House and we are anxious that it should be used. I suggest that we proceed to use it.

Question put and agreed to

Ordered,
That a select committee of thirteen Members be appointed to report on the draft bill on the Food Standards Agency (Cm. 4249);
That Ms Diana Organ, Ms Sally Keeble, Audrey Wise, Dr. Howard Stoate, Dr. Lewis Moonie, Mr. Martyn Jones, Mr. Kevin Barron, Dr. Stephen Ladyman, Mr. Owen Paterson, Mr. David Curry, Mr. Robert Walter, Dr. Peter Brand and the Reverend Martin Smyth be members of the Committee;
That the Committee have power

(a) to send for persons, papers and records;
(b) to sit notwithstanding any adjournment of the House;
(c) to adjourn from place to place within the United Kingdom;
(d) to appoint specialist advisers; and
(e) to communicate to any select committee of either House their evidence and any other documents relating to matters of common interest; and
That the Committee shall report by 31st March 1999.

Orders of the Day — Residential Care (Birmingham)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Mike Hall.]

Dr. Lynne Jones: I am grateful for the opportunity to raise the anxieties felt by residents of Goodrest elderly persons home in my constituency, their families and residents of other homes that Birmingham social services committee proposes to close or privatise.
I shall begin on a positive note. Birmingham city council has an excellent scheme for the development of extra care sheltered housing for elderly people. Under such schemes, individual residents have their own flat and their own front door, but where extra care is needed, it can be tailored to the specific needs of the individual and can change when the person's needs change, as he or she becomes more frail.
There is no argument in Birmingham about the development of the schemes. There are already 11 schemes providing 426 flats. I fully support those schemes, as the first two began when I was chair of housing in the mid-1980s, so I claim to be responsible for the development of the schemes. They are excellent, and Birmingham has been praised for them. There are various new developments on stream, and it is hoped that by the millennium or soon afterwards there will be 26 schemes running, providing a total of 1,030 flats.
By their nature, those are mixed developments. Although there are already several hundred such flats, I understand from the social services department that only 26 places have so far been allocated to those assessed as being in need of residential care. The provision is thus good for the future, but it is not particularly relevant to existing residents of elderly persons homes.
Over the years Birmingham city council has closed a number of homes, many of them in unsuitable locations. One was at Highbury hall, the former home of the Chamberlains. That building is now much better developed as a conference centre. It was right for the council to close that home. Over the years, non-purpose-built homes that were not entirely satisfactory have been closed.
I had hoped that my hon. Friend the Member for Birmingham, Northfield (Mr. Burden) would be present for the debate, but unfortunately he has been held up in his constituency, which includes the Longbridge area. I am sure that hon. Members and my hon. Friend the Minister understand that he would have liked to participate and is equally concerned about the proposals.
Birmingham city council has 35 residential homes for elderly people. Only 14 of the homes so far have been refurbished to bring them up to the standards rightly demanded of the private sector. A further four homes already meet registration standards, although they are in need of refurbishment. That leaves 17 homes that need considerable upgrading. The social services department reckons that it needs to spend £19 million to bring them up to scratch. Local residents have queried that figure, but even if it were halved, it would be a substantial sum.
The social services department is in a difficult position. Central Government, who control the capital spending of local authorities, have not allocated to it that level of


resource. In recent years, the problem has got worse. Until 1995–96, the previous Government allocated about £2.5 million for social services capital schemes. Since then, the sum has steadily decreased. In the forthcoming year, the allocation is a mere £838,000. I know that the leader of the council has made representations to the Secretary of State and expressed her concerns.
In the forthcoming financial year, only £100,000 will be available for new schemes—the rest of the money is already committed to existing schemes. The council has had to devise means to deal with the problem, which unfortunately involves closing several homes. It is proposed to retain and refurbish only four of the homes. The rest are to be sold to the private sector, to be privatised, or—as in the case of Goodrest elderly persons home—are to be demolished, and the site used for extra care sheltered housing.
The council will be left with eight homes for elderly people. The council says that it has a role to play in providing residential care, especially for those suffering from dementia. As hon. Members know, there is a growing elderly population, many of whom will unfortunately suffer from dementia.
In a report produced last year, the Royal College of Psychiatrists and the Royal College of Physicians stated that the figure of 700,000 elderly people currently suffering from dementia is set to rise to about 1 million in 30 years. The report called for a national framework of provision. It pointed out that the policy of contracting out institutional long-term care to the independent sector was imposed by the previous Government in order to transfer costs from the health budget to the means-tested social services budget. The report further stated that there is no evidence that the care provided is comparable in quality, safety and cost to that which can be provided by statutory services.
The report went on to deal with problems of abuse of elderly people in residential establishments. It identified abuse as a matter of growing concern and pointed to various risk factors—poor working conditions for staff, inadequate numbers of staff, inadequate supervision and training of staff, and inappropriate mixes of residents with different care needs.
I do not want to cast doubt on much of the excellent provision in the private sector. In Birmingham, as in other areas, the majority of residential care is provided by the private sector, but there are considerable concerns about the quality of provision in some homes.
In respect of these risk factors, there is grave concern about the rates that those homes are either prepared or able to pay their staff. I emphasise the words "able to pay", because I have been approached by proprietors of excellent private homes in my constituency who are extremely concerned about the rate of pay for each resident that they receive from the social services department, which has continued to pressurise them to reduce costs. The proprietors say that—because of the growing dependency of many elderly people who are discharged, often from hospital, into their care—they are not able to provide for their needs with the weekly allocation given to them by the social services department.
That means that many of those homes—some because they have no choice and others because they wish to profiteer—are paying appalling rates and using staff who have little training and are not committed to the work.
Looking after elderly people in residential care settings is a difficult job that requires dedication and a great deal of skill, whether or not the elderly people are frail or suffering from dementia.
This morning, I went to my local jobcentre to look at the vacancies for care assistants in private homes. The rate of pay varied from £3.10 an hour to £4.15 an hour for those trained to national vocational qualification standards and prepared to work shifts. One home was offering £3.60 an hour to experienced workers, including working nights and weekends. It does not require any stretch of the imagination to understand that those rates of pay are simply an insult to the work that is required to look after our elderly people.
Birmingham social services department pays its staff £4.35 an hour, which is not exactly rich pickings. It pays slightly higher rates for weekend and evening work and double time for night shifts. I think that those workers deserve that level of pay, and probably more. That level of pay, and more, ought to be provided for those who look after elderly people in our residential homes.
The residents of Goodrest home are extremely concerned about the closures. Occupancy in the homes that are run by Birmingham social services department is slightly under 100 per cent., because a number of places are reserved for respite care. Some elderly people, from time to time, need to go into respite care to give their carers a break or if they are ill and need residential care. Those places will also be put at risk by the closures, but—because there is no longer any slack in the system following previous closures, including the closure of one of the other elderly care homes in my constituency a couple of years ago, again to widespread concern among the residents and the local community—there is no slack in the system and there are next to no places available in other council-run homes. Even if people wanted to take up such places—which they do not, because they want to stay in their homes and they value the care that they receive—that choice would not be available to them.
Residents and their relatives are extremely concerned about their future. A meeting was organised last November by the local councilors—in Birmingham we have a system of ward sub-committees—and held at the home concerned in my constituency. Most of the residents attended, as did their relatives and members of the public. A vote was taken and it was unanimously decided that people wanted to stay in their home. They valued the quality of the care and feared what the alternatives might be.
It was made clear when the vote was taken that people would have to move out if refurbishment took place, but they would be able to move back later and maintain contact with friends and family during that process. Even though there would be disruption, there was an overwhelming desire to stay in the Goodrest home. From letters that I have received from relatives of my constituents in other homes, I know that such desire is felt elsewhere.
During the discussion, the assistant director of social services was asked what provision could be made for people if the closure went ahead. The assistant director made clear—this is in the minutes of the ward sub-committee meeting—that it
was not possible to give any guarantees about the standard of care to be provided to residents in the future".


He added that
the Department would be doing its utmost to seek to achieve the best possible care provision available at the time",
although that was likely to be in the private sector. There was no guarantee about the quality of care.
It is known that those homes are likely to employ staff on the rates of pay that I have mentioned, and there will probably be a lower ratio of staff to residents, so it is understandable that people fear for the future. They have been given no guarantees. Even if they had been, they would have wanted to stay in their home.
There is demand for these places in Birmingham, which is shown by the fact that the homes are full, and we will have a growing elderly population. Over time, provision in extra care sheltered housing will be available for the frail elderly, but there will be growing demand for residential accommodation for elderly people suffering from dementia and other symptoms of confusion.
The local residents and the carers have set about campaigning to keep their homes open. I pay tribute to the dedication of those local people and the relatives of residents living in Goodrest. The residents are not able to campaign, but their relatives are doing an excellent job on their behalf. They are collecting petitions and this Saturday was one of many on which they have spent hours in the cold and the wet collecting signatures to get public support for keeping their homes open. That is happening across the city, and they will be lobbying the social services committee when it meets next week to take decisions.
The consultation has shown that there is demand for homes that are run by the social services department. We know that most of those homes are already in the private sector. It is important, not only for the care of the residents, but for the well-being of all elderly people, to retain a proportion of such care in the public sector. That sets standards and acts as a benchmark for other provision. It also gives support to inspection regimes, which, I know, are having their hands tied.
Issues have been raised by my hon. Friend the Member for Newport, West (Mr. Flynn)—I have taken them up with the social services inspectorate in Birmingham—in respect of monitoring of the administration of medication to residents. It is clear that the monitoring of these private homes is unsatisfactory in that regard. A gun is being held to the inspectors' heads. They cannot close these homes because there is no alternative provision. That is another reason why we should maintain places in the public sector.
The local authority cannot raise the capital because of Government restrictions on capital spending. That is nonsensical. We are encouraging private provision, but to make places available the private sector is required to raise capital. It is more expensive for the private sector to raise finance than for the local authority to do so.
In the long run, it is economic nonsense to close these homes. They provide an excellent quality of care, and residents, their families and the people of Birmingham want them kept open. They are looking to their local councillors, local MPs and the Government to get together to ensure that Goodrest and other homes for the elderly in Birmingham stay open. I hope that the Minister will have something positive to say about meeting their needs.

Mr. Richard Burden: I apologise for my late arrival in the debate. As my hon. Friend the Member for Birmingham, Selly Oak (Dr. Jones) said, I was unfortunately detained by what could not honestly be described as a little local difficulty at Longbridge—a major crisis facing the whole of the midlands. I hope that the House will forgive me for my late arrival.
I congratulate my hon. Friend on securing the debate, and on her description of the issues facing elderly persons homes in Birmingham. I should like to make a few comments, which will be fairly parochial, as one of the homes affected is in my constituency. I shall illustrate some of the general problems facing elderly persons homes in Birmingham and some of the issues at stake.
The city council and the social services committee in Birmingham in particular face formidable problems. Over the years, they have attempted to establish an imaginative policy for the care of the elderly, in consultation with the health authority and others, under the "new homes for old" strategy. In principle, that strategy is valuable, because it emphasises partnership and the need for quality and choice in the care of the elderly. It emphasises the right of people, as they reach old age, to have the quality of care where they need it and the choice of care in all possible situations.
Frankley in Northfield became part of Birmingham in 1995: it was formerly part of Bromsgrove. Lyttleton house is an elderly persons home in Frankley which has provided a valuable community resource, and has been well regarded by people who live in the area. It is one of the homes that did not meet registration standards under the social services review. In the early part of last year, it was recommended for closure. The issues surrounding that home are much the same as those described by my hon. Friend for other homes, especially the Goodrest home in her constituency.
The "new homes for old" strategy adopted by Birmingham city council is about providing diversity in choice for elderly people in the city. However, I have been worried about the way in which the debate has gone in the past year in Birmingham. Under the most recent review of elderly persons homes, the selection of which homes should change their character, which should be recommended for closure, which should be offered other options and which should be refurbished seems to be linked to the current financial situation of the homes and the refurbishment costs estimated by the city council, rather than to the clear estimate of needs in the community and how those needs relate to the needs of communities elsewhere.
The city council and the social services committee have a genuine desire to consult local people about their proposals. Unfortunately, that genuine desire to consult has not always been matched by action on the ground. Questions have often been asked by local residents. In my area, an action group was formed to campaign for Lyttleton house, and the social services department has been asked about the plan for closure. Although answers were given, sadly they led to more questions about the cost of refurbishment, occupancy levels and so on. In Birmingham, we need a little more clarity about the review, and about how the current provision of elderly persons homes fits into that review.
The "new homes for old" strategy is sound. The responses to consultations have not related to that strategy. The committee's response to the comments on Lyttleton house, which included a 10,000-name petition of local people who want to save it, has been to suggest that, rather than closure, perhaps it could be considered for sale as a going concern. There may be arguments for that, but it prompted another round of consultation. Local people did not know whether they were coming or going. They were told that the home in which their relatives lived and which they valued was earmarked for closure. They were consulted, they gave their views and they were then asked whether, rather than closure, they wanted it to be sold off as a going concern.
The meetings of local people that I attended did not have confidence that their comments would have an impact on the decision-making process. I say that not to criticise or to have a go at the social services committee, because it is faced with a difficult situation in a difficult financial climate, and there are various competing pressures on it. But the difficulties faced by the social services committee are nothing compared with the difficulties faced by the residents of those homes and their relatives. They are told about the cost of refurbishment and that the need in their area is not easily equatable with the need elsewhere, but they are the ones that have to make decisions and advise their relatives for whom places such as Lyttleton house and Goodrest are their homes.
On 17 February, the social services committee in Birmingham will again meet to consider the future of elderly persons homes. I do not underestimate the difficulties that it faces, but I want to use the opportunity of this debate to suggest to the committee that it may be worth while pausing a little longer and thinking in a more joined-up way about the future of those homes.
For the homes that are threatened with closure, the solutions may not be limited to the straight choice of closure or sale to a purchaser as a going concern. We should think a little more flexibly and creatively about the way in which we provide elderly care in Birmingham. There should be more discussions with the health authority and other partners to see how the principles of the "new homes for old" strategy can be taken forward in practice. I want that imaginative strategy to succeed in Birmingham, but it will work only if its principles are reflected in the practice of the department on the ground. When the social services committee meets, I hope that it will consider proceeding along those lines.
I echo the point made by my hon. Friend. The local authority's ability to act is often circumscribed by the financial climate. Perhaps greater flexibility in that financial climate would enable it to be more creative, which is what we all want.

The Parliamentary Under-Secretary of State for Health (Mr. John Hutton): I congratulate my hon. Friend the Member for Birmingham, Selly Oak (Dr. Jones) on securing time for tonight's important debate; she clearly feels strongly about the issues. I also congratulate my hon. Friend the Member for Birmingham, Northfield (Mr. Burden) on his thoughtful comments.
My hon. Friend the Member for Selly Oak raised a number of issues relating to the provision of residential care in Birmingham. In particular, she discussed

arrangements for the local authority's so-called part III homes, standards of care, and roles for the public and private sectors as providers.
In Birmingham, as elsewhere, residential care is an integral part of community care. Before I deal with the specific issues raised by both my hon. Friends, it may be helpful if I say a word about the wider context in which the debate should be seen. As I am sure my hon. Friends are aware, the aim of community care is to provide the support that frail or vulnerable people need if they are to live in their own homes or in homely settings, retaining the independence, dignity and quality of life that come from being a part of the community. That means that local authorities must provide a balanced range of services that are accessible and adapted to meet the needs of individual service users.
We take no ideological view of who the provider should be. We see no reason why good-quality, cost-effective services cannot be given by the public sector, the private sector and voluntary providers. We recognise the important contribution that each must make. The important issue is not that of who provides a service, but that the service itself is of high quality, is responsive to users' needs and wishes, and delivers the best possible value for money. That means that local authorities must be rigorous and skilled purchasers of services from independent providers, and equally rigorous and skilled managers of their in-house services. In both cases, authorities must be committed to putting users' needs first, delivering top-quality services and ensuring that resources go as far as possible.
The local authority has the lead in planning and commissioning important services. The role of Government is to provide a legal as well as a financial framework within which those important services can be delivered. Let me say a little more about that wider framework, and about what we as a Government are doing to promote quality and value. The key elements include promoting partnership working—effective arrangements between agencies working locally, and the development of national standards and objectives for social services. We are doing that now, for the first time. We also want to encourage more effective commissioning, and we are providing the resources that authorities need to commission and deliver services effectively.
As I am sure my hon. Friends will know, over the next three years £3 billion of additional revenue will be devoted to social services. Let me mention some of the important initiatives with which we are taking forward our agenda. We are determined to improve partnership working between social services and the national health service, because people's needs do not recognise organisational boundaries. In the case of older people particularly, they are often complex: they change, both in the short term and over a longer period. Following a period in hospital, people may need additional support—from the community health service, for instance—if they are to return home; or they may need residential care places if discharge is not to be delayed, and if unnecessary readmission is not to be caused. We need to consider residential care provision within the broader context of community care services, mapping out the key links with other agencies.
When residential care is planned, what is important is effective joined-up thinking in the wider community care and health context. The interdependence of health and


social care makes it essential for the provider agencies to collaborate effectively in service planning, commissioning, assessment and delivery—and, not least, in funding.
Section 28A of the National Health Service Act 1977 has long been a key funding mechanism enabling health authorities to support the work of social services. Not least, that includes supporting residential and nursing home placements—for example, through the provision of "dowries" and similar payments in respect of people transferring from long-stay hospitals, or through the support of innovative cross-agency services.
I am sure that both my hon. Friends will know that, in the Health Bill that we published recently, we outlined the way in which we intend to legislate in order to ensure that more effective working between social services and the national health service becomes the norm. First, we are determined to remove whatever legal obstacles might obstruct effective working between the NHS and social services. Secondly, in our executive letter entitled "Better Services for Vulnerable People", we set out the medium-term agenda for people with continuing health and social care needs. Further guidance on the better services initiative was issued in August by the NHS executive and the Department's social care regions.
The circular asked local and health authorities to proceed in three important areas. First, there were the joint investment plans that will provide a national framework for multidisciplinary assessments of older people in acute and community health settings, jointly with social services, and the development of a range of recuperation and rehabilitation services for older people. Joint investment plans will constitute a distillation of the health improvement plan and community care planning information. They bring together in a single document the joint information needed for health and social services to deliver on their respective responsibilities. The recent guidance requires health and local authorities to have joint investment plans in place by April this year, as a minimum, for older people, including those with mental health problems.
Multidisciplinary assessments, by health and social services, have always been a joint responsibility within community care. More effective multidisciplinary assessment means better co-ordination of care services. In the community, it may avoid unnecessary hospital admission and allow older people to remain in their own homes for far longer; in the hospital setting, good multidisciplinary assessments may avoid an unnecessary admission subsequent to institutional care. Similarly, we hope that the development of recuperation and rehabilitation services will enable people to return to the community sooner, and to remain in their homes for longer.
Thirdly—perhaps this is our most important proposal—we intend to modernise social services. This is a key theme in the recent social services White Paper, which provides a context in which services such as residential care must be seen and developed. We are talking about maximising independence rather than supporting dependency, with the new emphasis that we intend to place on rehabilitation, recuperation and prevention services.
The White Paper, however, does not stand alone. It is part of the Government's overall strategy to improve health and social services. Together with the document "The new NHS" and the Green Paper "Our Healthier Nation", the social services White Paper provides a foundation for the future of health and social care.
My hon. Friend the Member for Selly Oak raised the issue of standards of care and inspection in care homes. That is a key issue, and, indeed, a key element of the White Paper. Local authority-provided residential care homes are not currently required to be registered in the same way as independent homes, but local authorities are required to inspect their homes, and to apply the same standards to private and public provision. When local authority homes are below standard, we expect authorities to take appropriate action to bring them up to scratch. It is only right for vulnerable people in local authority homes to expect the standards that authorities apply to the independent sector.
There are many problems with the current regulatory system for social services, and we want to put those problems right. We are committed to reforming regulatory arrangements for social services, and our proposals have been set out clearly in the White Paper. We want to create independent regulatory bodies, which will be called the commissions for care standards and which will be responsible for regulating all residential care homes, including local authority homes as well as nursing homes, children's homes and other care services such as domiciliary care agencies.
We are also committed—my hon. Friend the Member for Selly Oak may be interested in this—to the development of national regulatory standards that can be applied to all care homes. As a first step in the development of national standards, we commissioned the Centre for Policy on Aging to advise us on standards for older people in residential care. The CPA recently submitted its report to the Government, and we intend to publish the standards for consultation shortly. I assure my hon. Friend that we are determined to set standards that will consider the quality of care that is needed for vulnerable people.
My hon. Friend spoke at length about the particular circumstances of social services in Birmingham. As I am sure she will be the first to acknowledge, spending priorities vary from area to area. As I have said, of the authorities locally, local authorities are best placed to assess those priorities. I have described several ways in which we are supporting them in delivering quality, cost-effective services. Clearly, though, a crucial factor in the equation is money. Commissioning services means committing resources. Committing them wisely means planning ahead. We are aware of the strains on social service budgets, and we have demonstrated our intention to ensure that social services receive priority among the many services that receive Government support.
My hon. Friend the Member for Selly Oak will be aware that the outcome of the comprehensive spending review provides significant increases in resources for local authority social services—as I have said, almost £3 billion extra over the next three years and an additional £500 million in the current financial year. The increased resources mean that social services departments will be able to plan ahead, knowing that there will be increased


funding in each of the next three years. They will have the resources that they need to provide effective and integrated services to vulnerable people in society.
I should like to return to the specific question of residential care homes and, in particular, the arrangements that my hon. Friend the Member for Selly Oak has described affecting Birmingham. As I have said, resources nationally for social services are being increased by 6.1 per cent. next year. That is significantly above inflation. We are targeting a large proportion of that increase at improving the services for older people through better planning and delivery of services across the interface between the health service and social services through improved rehabilitation services.
Older people make an enormous contribution to national life. The Government are determined to ensure that their wishes and needs are taken seriously. We also intend to ensure that older people are valued and can play their full part in society.
As I have mentioned, the recent White Paper set out what the Government propose to do to modernise social services. People generally want to live in their own home if they can, and the Government intend to put greater independence at the heart of social services for adults. However, we recognise that, for some people, care in a residential setting will be inevitable and appropriate.
A recent survey by Birmingham social services showed that some people in residential homes were inappropriately placed and capable of managing their lives better at home. It was believed that, given improved rehabilitation services, many of those people would not need to go into residential homes in the first place. I am sure that my hon. Friend the Member for Selly Oak would want to ensure, if possible, that that happened.
Birmingham health authority is developing a proposal whereby social services would pay a premium for short-term stays in residential homes if they offered rehabilitation services that enabled the person to return to their home eventually. Birmingham health authority is also running a pilot along those lines for people with specific health needs.

Dr. Lynne Jones: All that my hon. Friend has explained on the Government's strategy is commendable, as are the additional revenue resources, but it has been made clear that the residents of the homes that are to be closed will not be offered a place in their own home. Many have left their homes. They have no home. The extra care sheltered housing is not on offer to them. The issue is not about the revenue cost—the day-to-day cost of running the home—but about the cost of the refurbishment and capital expenditure. That is the important issue. I would be grateful if he would say a few words about that.

Mr. Hutton: I do intend to say a few words about that, but I am sure that my hon. Friend and I are at one on the general direction that we want to take, which is to promote wherever possible independence and independent living. She was anxious—I think that it was her main concern—about the quality of care that her constituents could face in the private sector. She expressed anxiety that there would be no guarantee that they would receive a comparable quality of service. I accept that one of the Government's responsibilities is to take action to set standards and to ensure that they are sufficiently high. We take that responsibility seriously.
That is why we have commissioned the work from the Centre for Policy on Aging to help us to set a proper standard that we can apply across the spectrum, but we intend—the Government have made it clear; I hope that I have done so tonight—to ensure that, in developing those new national standards, we consult as effectively as possible with all providers, in both the public sector and the private sector.
My hon. Friend the Member for Selly Oak referred to capital. She may be interested to know that I had some correspondence with the leader of Birmingham city council about the issue. Figures from the Department of the Environment, Transport and the Regions have shown that, from 1995–96 to 1999–2000, Birmingham has had approximately £230 million made available to it from central Government for capital programmes, and between £6 million and £10 million in usable receipts.
We have told Birmingham city council that we are anxious to encourage local authorities to make full use of the private finance initiative. We are keen for authorities to seek partnerships with the private or voluntary sector because, in many cases, as my hon. Friend may be aware, such partnerships can offer very good value for money in the provision of services and capital investment.
My Department has PFI credits available for the current financial year. If Birmingham city council is interested in exploring that option with us, we would be interested in hearing from it.

Dr. Jones: That is an interesting proposal, but I understand that that has been explored. In relation to the total capital programme, obviously Birmingham is a big city and it has a big capital programme, but the fact remains that the allocation that the Government have earmarked for social services has declined and is very small.

Mr. Hutton: I would hate to have an argument with my hon. Friend about the level of social services expenditure. I am sure that she would acknowledge that over £500 million of additional money has been put into social services in England, Wales and Scotland this year. That is a significant increase. The local government financial settlement for Birmingham shows that, overall, resources increased by 4 per cent. this year, which is above inflation.
We could go on arguing around those points. I do not think that it would be fruitful to do so, but, as I have said to the leader of Birmingham city council, we are interested in exploring with the council any opportunities for private finance initiatives. We still look forward to hearing any confirmation from the council that it wants to explore that with us.
My hon. Friend the Member for Selly Oak was right to say that the social services department has been considering the future of all of its own residential care homes for older people. Some homes have been sold and some have been refurbished. The overall strategy included upgrading some of the homes to meet registration standards, and receipts from the homes that have been sold contributed significantly to that upgrading. The strategy also includes providing for a range of alternative care provision, to residential care in which people can still have their own front door and receive the degree of care and support related to their needs.
My hon. Friends the Members for Selly Oak and for Northfield both mentioned the development of extra care sheltered housing, which now has 11 schemes in operation, with a further three new build schemes planned for 1998–99. As 12 more schemes are in the pipeline, there will be a total of 1,030 flats by 2001.
The strategy employed by the social services department has been in line with that of many other local authorities that have divested themselves of in-house residential provision for older people. The social services committee has approved the strategy, and there has been a formal process of consultation with all stakeholders before any decisions have been taken on the future of each home.
I understand that arrangements for all but eight of the authority's 35 homes have now been satisfactorily resolved. The social services department is currently out to consultation on the final eight homes, and findings and any final proposals will be reported to the social services committee for a decision, on 17 February. Any homes that are sold to the independent sector will be subject to the process of registration and inspection that—I should like to ensure my hon. Friend the Member for Selly Oak—will ensure the quality and standard of care available.
Birmingham is not alone in reviewing its provision of residential care. Local authorities across Britain have been examining ways of improving services, to put together imaginative and innovative care packages for the benefit of care service users and their families. Whatever decisions an individual authority makes when considering changes to the extent of their provision of residential care, the welfare and wishes of residents and staff of the residential care homes concerned must be taken fully into account.
Regional offices of the Social Care Group monitor developments of that nature and keep Ministers fully informed. However, as I am sure that both of my hon. Friends will accept, it is essentially a matter for the local authority concerned to decide how best to meet the need for social services, including residential care, in their own area.
Taken together, the measures that I have outlined will help to improve both the quality and the delivery of social services across Britain. The Government are committed to ensuring that we have first-class social services that provide flexible user-centred care to those who need it. I assure both my hon. Friends that that applies as much in Birmingham as it does anywhere else in Britain. I assure them also that I shall continue to take a close interest in the issues that both of them have raised in this debate.

Question put and agreed to.

Adjourned accordingly at half-past Eight o'clock.